Groser Tim: Debate on Prime Minister’s StatementText is incorporated into the Bound VolumeGroser Tim: Debate on Prime Minister’s Statement[Sitting date: 10 February 2015. Volume:703;Page:1402. Text is incorporated into the Bound Volume.]Hon TIM GROSER (Minister of Trade): I am rising to support the confidence motion. I rise in support of a confidence motion about a Government that has the privilege of leading a very confident country. I think that the positive mood of this country—it is obviously a subjective matter in part—is very obvious. It is based on a number of things. Some of them have absolutely nothing to do with whoever is in charge of the Treasury benches. We have had some great sporting successes that we all celebrate. The weather has been great—probably too great for some of our farming folk; let us hope that the rain gives them a little bit of relief. But there is a sense of confidence around the country.I think that that is reflected first of all at the political level. The people have spoken. I listened to some of the speeches today wondering what on earth is going through people’s minds. Is it a “the public have once again made a terrible mistake” scenario? The reality is this. As the Prime Minister said in his opening statement today we have been given a very clear mandate to carry on in a third-term Government and we are just brimming with new ideas. We have got some wonderful fresh talent which has come into the House at the last election and I think that those members will serve whoever forms the leadership of the National Party in a generation ahead of us. They will be a tremendous base on which to renovate and keep the country and the party moving forward. We are in a very confident position.In terms of results on the street first of all we can clearly see those in a number of areas. I do not have a great deal of professional input into those areas but I know that crime rates are at a 35-year low. People are safer on the streets. Is this good enough? Absolutely not. What are we going to do? We are going to carry on and try to drive that trend line even better. That is the theme of our third-term Government. As you listen to the speeches that will inevitably be made over the next 2½ years about tired “third-term-itis” just look at the facts. As somebody once said everybody is entitled to their opinion but they are not entitled to their own facts. This is where we will be coming from.I want to talk now about the economy because it is absolutely central to what I think is the confident mood of this country. I think it is central to why we were re-elected by the New Zealand people for a third term and I think it is central to why we feel very confident about what we are doing. We have a very clear idea about what the next steps in this process are. Economic fundamentals lie at the heart of this. There was a famous very hard-line Treasury secretary in Australia called Dr John Stone inevitably giving rise to the phrase “the Stone age”. He said something along these lines: many politicians decry economic fundamentals and believe that these are the concerns only of ivory tower academics but the history of Western democracies is littered with the political bodies of those who said those things. Ultimately economic fundamentals will impose themselves on people.I am well aware of the old dictum “The public wouldn’t know a deficit if they fell over it in the street.” and you could say the same thing of a number of these issues like total factor productivity. Probably not many people sit around at dinner parties worrying about trends in total factor productivity and whether we are in surplus or not but finally actually Governments need to be concerned about economic fundamentals because these will impose themselves on things that people very much understand. They will impose themselves either positively or very negatively. Right now we are seeing a drama unfold in Greece around the issue of “Grexit” which is all about economic fundamentals. Successive Governments on the left of centre in Greece spent like drunken sailors. Admittedly it was not just their fault. The people who lent them money were also reckless in lending them more and more money to the point where debt to GDP ratios exceeded 200 percent. But the reality now is that the poor Greek people in the street are suffering from a lack of attention to economic fundamentals and it is a long hard road back up from there.If Governments do not discharge their premier responsibility on the economic front and do not pay attention to the fundamentals—maintaining sound books keeping competitiveness in check making sure there is discipline on public spending and trying to protect people who are vulnerable while also maintaining incentives to work—the people in the street who yes may not know a deficit if they fell over it will find out the hard way. What we are seeing now I think in New Zealand are very clear signs—and I do not think they arose just in the last few months; I think we have been seeing them for at least 12 to 18 months—that the sound attention led by our Minister of Finance Mr English is starting to produce things that people in the street really can feel and really can relate to.On the fundamentals I think the key issues are that we are moving away from the projected very large surpluses into what will be we think—we hope—a paper-thin surplus. It has been a very tough ask. It has been very difficult to manage the books without slashing and burning. All the talk about slashing and burning is just fantasy and political rhetoric. We have done exactly the opposite. We borrowed heavily during the global financial crisis to protect the poor and vulnerable people of this country but we have somehow managed to get through that and still get the books back to a very sensible position. We are quite happy that Crown debt is projected to be 20 percent by 2020.We have also thanks to the very able leadership in the Reserve Bank got monetary policy into an interesting position. The fact that we have an official cash rate at the moment of 3.5—I think it is 3.5—is actually a sign of strength. It is way above other people’s interest rates but actually the countries in serious trouble are the countries with either zero or close to zero interest rates or essentially negative interest rates. They have run out of any capacity to use monetary policy in a creative way.I recall a very important hedge fund manager saying recently in the Financial Times that there are certain things we all wish could be un-invented: nuclear weaponry chemical weaponry and boy bands—I leave it to members to speculate on why he added boy bands into that. He said then crucially: “I confidently predict we shall add quantitative easing to that list.” So the United States is now starting to deal with the realities of essentially zero interest rates which have massive distortions and this will not be easy. Europe is now going to go down that same track. The fact that we have got a relatively high interest rate—although still the lowest for many years—is actually a sign of the underlying strength of this economy. It is another reason that will translate into things that people in the street can understand.What we now have is—let us start to look at what the people have. First of all the people have more jobs a huge number—I think from memory the figure that the Prime Minister quoted in his speech was 217000—and I think 83000 people have been employed in the last year. The really intriguing thing about this is by the way—even that well-known right-wing commentator Rod Oram said it; I heard it on talkback—that the important thing to focus on is not the minor flick up from a very low 5.4 percent to 5.7 percent but the extraordinary growth in the participation rate which means that finally people who have been a bit marginalised feel confident enough to come back into the workforce because they know that there are jobs there.I was very intrigued over the weekend. The United States job market figures are very interesting in terms of the political debate here in New Zealand because in spite of the vast difference in size—US GDP is about 100 times larger—there was a tremendous increase in the number of jobs created in the United States in January and this is extremely positive. But actually exactly the same thing happened. The unemployment rate flicked up a tick or two by I think 0.3 percent but all of the commentators in the United States said that the really important thing is that the participation rate also increased. American working-class people who have been marginalised by this crushing situation in the United States economy have now got enough confidence to come back and look for work. Yes it has flicked up the unemployment rate a little bit but it is a great sign for the United States that its participation rate went up to 62.8 percent. That figure is interesting—our figure is 7 percentile points higher than that. We have got an amazing job record. This Government has got an amazing job record.You know although we will hear rhetoric over the term of this Parliament about “third-term-itis” we are dealing with a country that is confident with a Government that is confident and with a very clear vision of what needs to be done. We are going to carry on as the Prime Minister has said.