Lotu-Iiga Sam: Questions for Oral Answer — Questions to Ministers Questions to Members 
Text is incorporated into the Bound Volume 
Lotu-Iiga Sam: Questions for Oral Answer — Questions to Ministers Questions to Members 
[Sitting date: 04 October 2011. Volume:676;Page:21626. Text is incorporated into the Bound Volume.] 
2. 
PESETA SAM LOTU-IIGA (National—Maungakiekie) 
 to the  
Minister of Finance 
: What is New Zealand’s credit rating and how does that compare with previous ratings? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Following last week’s changes the long-term foreign currency credit ratings are AA from both Standard and Poor’s and Fitch Ratings and Aaa from Moody’s. The local currency ratings are AA+ from Standard and Poor’s and Fitch Ratings and Aaa from Moody’s. All ratings are on a stable outlook. New Zealand’s rating was AAA up to the early 1980s. It then dropped down to AA- through the late 1980s and into the early 1990s. We steadily improved over that decade and it is disappointing to see that misjudged economic policy through the last decade has led us to the situation of a further ratings change. 
Hon David Cunliffe 
: To the Minister— 
Mr SPEAKER 
: Wait a minute; I have not called any member yet. I had better go to the usual practice and go to Peseta Sam Lotu-Iiga for the first supplementary question. 
Peseta Sam Lotu-Iiga 
: What are the main factors that have put the credit rating under downward pressure? 
Hon BILL ENGLISH 
: The ratings agencies have stressed for some time that their view of New Zealand is determined by New Zealand’s large external liabilities most of which is private debt. It has built up gradually over several decades but in the time from 2000 to 2008 we had record excessive Government spending. We had a current account deficit of over 8 percent for 4 years which is almost a record for any country. During that time New Zealand households were spending about $1.11 for every dollar they earned and the tax system was encouraging rampant debt-fuelled property speculation. Since then the Government has taken several measures to change these dynamics in the New Zealand economy with some success but because of the deteriorating global outlook ratings agencies have become more sensitive to what are now lower external debt levels. 
Hon David Cunliffe 
: Who was the Associate Treasurer when New Zealand’s credit rating was last downgraded by Moody’s on 24 September 1998? 
Hon BILL ENGLISH 
: I am not sure but it might have been me and I am very pleased that that was during a period when New Zealand made considerable progress in productivity growth export growth and employment growth. That was all squandered by the Labour Government that came afterwards. 
Peseta Sam Lotu-Iiga 
: How has New Zealand’s financial position changed over the past 3 years? 
Hon BILL ENGLISH 
: We have focused on getting through the recession while encouraging more saving and exporting and discouraging excessive property speculation out-of-control Government spending and too much debt. By every measure the outlook has improved over the last 3 years. The balance of payments deficit which was 8 percent for 4 years under Labour—almost a developed-country record—has now halved households are now saving again and we will have positive savings rates for the first time in 20 years next year. Government debt will peak at less than the projections when we took office and our foreign liabilities have fallen by $16 billion over the past 2 years. In the context of a global recession a New Zealand recession an economy mismanaged by the previous Government and the Christchurch earthquake that is a pretty good result. 
Peseta Sam Lotu-Iiga 
: What policies will continue to improve New Zealand’s financial position? 
Hon BILL ENGLISH 
: Two straightforward policies. One is to ensure that the Government gets to surplus that its debt stops rising in the next 2 or 3 years and we begin to pay down that debt. The second is that we develop further our capacity to earn a living by selling goods and services to the rest of the world rather than speculating and buying houses from each other. It is disappointing to hear that the Labour Opposition does not understand that and has so far trotted out— 
Mr SPEAKER 
: Order! 
Hon BILL ENGLISH 
: —spending promises— 
Mr SPEAKER 
: Question No. 3 the Hon Annette King. [ 
Interruption 
] Question No. 3 the Hon Annette King. 
Hon Annette King 
: Just giving some instructions to the Minister of Finance. 
Mr SPEAKER 
: Order!