Young Jonathan: Questions for Oral Answer — Questions to Ministers Questions to Members 
Young Jonathan: Questions for Oral Answer — Questions to Ministers Questions to Members 
[Volume:676;Page:21491] 
2. 
JONATHAN YOUNG (National—New Plymouth) 
 to the  
Minister of Finance 
: What information has he received about how the New Zealand economy might be affected by the economic and fiscal issues in the United States and Europe? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 There is a clear message from recent events in the US and Europe that these major economies face large challenges stemming from too much debt and it will take some time to sort out these problems. New Zealand is not immune from the fall-out either in financial markets or in terms of the demand for its exports. After all we are borrowing in the same markets as the indebted countries in Europe and Europe and the US remain significant export markets for New Zealand. It is a bit hard to judge exactly what impact there would be on New Zealand if there was a significant crisis in the US and Europe but in the absence of such a crisis our best information is that New Zealand is relatively well placed to be able to continue to grow moderately even if these large economies find that their growth slows down. 
Jonathan Young 
: What are the attitudes of international lenders in the current global environment? 
Hon BILL ENGLISH 
: I have had the opportunity recently to talk to a range of politicians credit rating agencies and international banks. It would be fair to say they have a fairly gloomy view of economic prospects around the developed world over the next 12 months or so. In fact I would describe the mood as ugly. Heightened uncertainty in markets means that international lenders and credit rating agencies are increasingly concerned about companies countries or banks that have significant debt. Although the New Zealand ship is in better shape than it was 2 or 3 years ago the international waters are becoming choppier. 
Hon David Cunliffe 
: Given that the Minister has just now confirmed his assessment that the international picture is ugly and given the earlier statement that we can only muddle through why has he been contradicted by the Prime Minister who said we can be “reasonably confident” of strong growth in quarters two three and four this year despite growth in quarter two being a paltry 0.1 percent? 
Hon BILL ENGLISH 
: If I could correct the member I actually said the mood was ugly. To go into a bit more detail it is reasonably clear that the US and European economies are likely to slow down and that is reflected in changes in recent international forecasts. However New Zealand’s principal exporting is now done with Australia and China both of which have fairly good growth prospects. So I agree with the Prime Minister that New Zealand’s growth prospects remain better than those of most developed countries. 
Jonathan Young 
: How is New Zealand placed to deal with this increased uncertainty in global financial markets? 
Hon BILL ENGLISH 
: We are reasonably well placed. We have had a growing economy. We have set a path back to surplus which we will achieve at a time when most countries will still be in deficit and will be increasing their borrowing. We are reducing New Zealand’s overall indebtedness to the rest of the world which is our largest vulnerability. One measure of this is our net international liabilities which cover households business and government. As at 30 June 2009 our net international liabilities were 86 percent of GDP and as at 30 June this year they are just slightly under 70 percent of GDP which means that compared with the size of our economy our total stock of international liabilities is now shrinking. That is mainly because of changes in the behaviour of New Zealand households which are saving more and some statistical changes that mean we are measuring New Zealand assets owned in Australia better than we used to do. 
Jonathan Young 
: What other progress has the Government made in reducing New Zealand’s vulnerability to the current global market environment? 
Hon BILL ENGLISH 
: The other progress that has been made has been to change the approach of the general machinery of government to ensure that it is focused on value for money. That has taken a couple of years of pretty consistent discussion and policy changes with Government departments but now they understand the need for value for money and have begun the process of making significant changes to ensure that they can deliver more service to the public for less. We have also moved to improve our business environment because after all there will be new jobs only when businesses are confident enough to invest. We are making some progress there as well.