Parker David: Questions for Oral Answer — Questions to Ministers 
Text is incorporated into the Bound Volume 
Parker David: Questions for Oral Answer — Questions to Ministers 
[Sitting date: 06 December 2012. Volume:686;Page:7269. Text is incorporated into the Bound Volume.] 
4. 
Hon DAVID PARKER (Labour) 
 to the  
Minister of Finance 
: Does he stand by his statement that “I just don’t think the world will let us run 7 and 8 percent current account deficits. It just won’t. I think you’d get the kind of sharp adjustment that the textbooks tell you would happen in the exchange rate or interest rates”; if so has he seen NZIER’s forecast for New Zealand’s current account deficit as a percentage of GDP for 2014 and 2017? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Yes I do stand by my statement. In answer to the second part of the question I have not seen its forecast but the Reserve Bank this morning noted that the current account deficit has improved significantly since it was around or above 8 percent of GDP between 2006 and 2008. It forecasts the deficit to be between 5 and 5.5 percent of GDP over the next 3 years—a significant improvement on the record levels of current account deficit that applied under Labour’s period up to 2008. 
Hon David Parker 
: Does he agree that international credit rating agencies are less tolerant of large current account deficits than before the global financial crisis? 
Hon BILL ENGLISH 
: Yes I do and that is why we have been pursuing a mix of policies that can in the end have only an indirect influence on the current account deficit to repair the damage done by the previous Government— 
Mr SPEAKER 
: Order! Order! The question was an absolutely straight question. 
Hon David Parker 
: Why if he is sticking to a plan that is working is the current account deficit forecast by the IMF to be the worst in the developed world next year and forecast by the New Zealand Institute of Economic Research to get worse to negative 8 percent of GDP within 2 years and negative 9.9 percent of GDP in 5 years? 
Hon BILL ENGLISH 
: We are pursuing a bunch of policies that as I said can indirectly influence the current account deficit—because we cannot influence it directly. They are aimed at increasing savings exports and the rewards for work and decreasing debt-fuelled consumption. The forecasts the member quotes happen to be at the pessimistic end of a pretty wide range of current account forecasts. I think economists are not sure yet about the extent to which New Zealanders may or may not be changing their behaviour. The Reserve Bank is a bit more optimistic. For the period that the member says one forecast says the deficit will be 8 percent of GDP the Reserve Bank says it will be about 5.5 percent and 5.5 percent is closer to sustainable. 
Hon David Parker 
: Given that export values have declined 11 percent over the past year unemployment is at the highest level for 13 years next year’s current account deficit is forecast by the IMF to be the worst in the developed world income inequality is at the highest level ever recorded and household savings have turned negative again when will he admit he has failed to rebalance the economy? 
Hon BILL ENGLISH 
: I think as I have said many times there are certainly some strong headwinds for the rebalancing of this economy. That is not a reason to give up. I mean if the member believed his rhetoric he would certainly not have backed a promise to build 600000 houses funded by the Government. That will have all the negative effects that he is predicting.