Williams Andrew: Questions for Oral Answer — Questions to Ministers Questions to Members 
Text is incorporated into the Bound Volume 
Williams Andrew: Questions for Oral Answer — Questions to Ministers Questions to Members 
[Sitting date: 23 October 2012. Volume:685;Page:6044. Text is incorporated into the Bound Volume.] 
12. 
ANDREW WILLIAMS (NZ First) 
 to the  
Minister of Finance 
: Is reducing the current account deficit a priority for the Government? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Yes. This is one part of the Government’s wider programme to reduce New Zealand’s longer-standing external imbalances which have built up over 3 or 4 years. The Government has taken a number of steps to encourage New Zealanders to live within their means and save more because ultimately it is the behaviour of New Zealanders that determines the extent of our current account deficit. We are making progress. Household savings are significantly positive for the first time in 20 years and New Zealanders are paying down debt. But there is some long way yet to go with New Zealand households being among the most indebted in the developed world. 
Andrew Williams 
: How can he say it is a priority when the current account deficit is forecast to double from about $8 billion to $16 billion over the next 4 years? 
Hon BILL ENGLISH 
: As the member may be aware you cannot target the current account deficit in the same way as you can for instance target the deficit in the Government’s accounts. We can decide to spend less and raise more tax but we cannot independently make New Zealand households and businesses behave differently from the way they have behaved for the last 30 years. The current account deficit at the moment is around 4.9 percent much lower than the 3-year average of over 8 percent in the last term of the last Labour Government. So the critics of the current account deficit had a much worse deficit when they had had 9 years to get on top of it. 
Andrew Williams 
: What impact would a 20 percent decline in national income from milksolids as forecast in the annual  
Farm Monitoring Report 
 released today have on the current account deficit during the same 4-year period? 
Hon BILL ENGLISH 
: That would not help. It would be better for New Zealand if its national income was rising rather than falling which is why it is important that we look after the productive capacity of our dairy industry. We cannot have it both ways. We cannot reduce our current account deficit on the one hand and then run with Opposition parties’ policies which are essentially to try to shut down the dairy industry. That would make the current account deficit a lot worse. 
Andrew Williams 
: Given that the “big four” Australian banks made a combined profit of $3 billion in the 2011 financial year has the Government considered ways to improve banking competition in New Zealand and reduce the amount of profit being repatriated overseas? 
Hon BILL ENGLISH 
: The current competitive rules for the banking sector are about as open we think they can be. Bear in mind that the small open economies that are really in trouble are those that have had banking problems and banking collapses—Ireland being the most obvious example but there are others. It is our view that having reasonably strong banks at this time is actually good for the economy. It enables businesses and households to continue to borrow money. The Government’s focus in respect of banking at the moment is to introduce the open bank resolution process which will reduce the likelihood that taxpayers would have to bail out any bank that got in trouble. 
Andrew Williams 
: Given the cost to New Zealand of international freight being in the order of $5 billion a year what specific recommendations is the Government considering in respect of the recent Productivity Commission report into international freight as a way of improving the balance of payments? 
Hon BILL ENGLISH 
: That is a very good question and the Government is considering the report of the Productivity Commission. Its recommendations covered a range of areas including competition rules among shipping lines and the impact of local government ownership on the efficiency of ports. The Government will pick up whatever recommendations it believes can make a difference to competitiveness. I am pleased the member is focusing on those issues because it is exactly those less glamorous and more complex issues that are the key to improving our competitiveness. There is no other free lunch with the current account.