Naylor Jono: Oral Questions — Questions to Ministers Questions to MembersText is incorporated into the Bound VolumeNaylor Jono: Oral Questions — Questions to Ministers Questions to Members[Sitting date: 25 August 2015. Volume:708;Page:6070. Text is incorporated into the Bound Volume.]2.JONO NAYLOR (National) to the Minister of Finance: How is the New Zealand economy placed to be resilient to international economic fluctuations?Hon BILL ENGLISH (Minister of Finance): The New Zealand economy is well placed. First we have a floating exchange rate which can assist to smooth the domestic implications of international volatility in global markets. Secondly we have a clear monetary policy framework which includes the Reserve Bank’s authority to adjust short-term interest rates as it judges appropriate. Thirdly a programme of microeconomic reform over recent years means that our industries are in a better position to adjust quickly and to adapt to changes in international market conditions. Fourthly New Zealand households have had a positive net savings rate for 5 years. Household bank deposits have doubled since 2007 and the Government is on track to surplus and keeping Government debt levels low.Jono Naylor: How do New Zealand’s exchange rate policy settings support the resilience of the New Zealand economy?Hon BILL ENGLISH: We see around the world alongside fluctuations in sharemarkets continuing decreases in commodity prices and we know that there has recently been a substantial fall in dairy prices affecting New Zealand. The Global Dairy Trade index remains 39 percent below its March peak. However there have been some offsetting factors. The exchange rate has fallen around 25 percent against the US dollar since mid-2014. This lower exchange rate will provide some cushioning for the effect of lower dairy prices but just as important it will assist the profitability of other industries that have no connection to dairy at all such as tourism which is now our largest industry and which was forced to become more efficient when the exchange rate was US88c and of course is now able to expand and become profitable with the exchange rate being significantly lower.Jono Naylor: What other factors support resilience in the New Zealand economy?Hon BILL ENGLISH: Our households have in the last 6 or 7 years been through a considerable process of adjustment. Many of them have decreased their debt many of them have been very careful about the new debt that they might incur and they have increased their savings rates. They have also been dealing with relatively low costs of living and they have been careful with their consumption. Alongside that our businesses have seen quite high rates of business investment. In fact there has been a 6 percent growth in business investment per annum over the past 4 years which means firms are in a reasonable position now to take advantage of favourable factors such as the lower exchange rate.Grant Robertson: In light of that answer by how much has net Government debt grown since he became the Minister of Finance? If he does not know the exact answer it begins with $60 million.Hon BILL ENGLISH: Net Government debt has grown—and it has grown quite a bit—because the Government has taken a policy approach of adapting to the circumstances rather than being paralysed by the notion that every week is a crisis. So when we had a global financial crisis which was a real crisis and major earthquakes in Canterbury which were a crisis we borrowed money to fund our way through that. The good news is that we are on track to surplus and we will be able to stop borrowing more money.Grant Robertson: I raise a point of order Mr Speaker. In light of the Minister’s answer—Mr SPEAKER: Order! Can I have the point of order.Grant Robertson: I seek leave to table Statistics New Zealand figures showing that net—Mr SPEAKER: Order! The member will resume his seat. Statistics New Zealand figures are available to all members.Jono Naylor: What reports has he seen on the outlook for the New Zealand economy?Hon BILL ENGLISH: There are any number of reports by people who are looking out through the events of the last few days including Treasury and the Reserve Bank and their reports indicate economic growth is expected to be around 2 to 2.5 percent per year over the next few years. That is the sort of moderate sustainable growth that translates into higher wages and more jobs for New Zealand families. We are yet to see whether news over the last week or so of decreases in stock markets around the world will make some difference to those growth forecasts. But it is not obvious that they will make a big difference nor that it will make a difference soon but we can only wait and see.