Cunliffe David: Questions for Oral Answer — Questions to Ministers 
Cunliffe David: Questions for Oral Answer — Questions to Ministers 
[Volume:668;Page:14763] 
1. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
 to the  
Minister of Finance 
: Does he agree with Reserve Bank Governor Alan Bollard’s assessment that the economic recovery is proving to be “slow and fragile”? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Compared with previous recoveries generally yes. As Dr Bollard noted in the bank’s annual report a different kind of recovery is to be expected when an economic recession which began in early 2008 is followed by a global financial crisis. Despite this he also states in the report: “We have now emerged from a long recession and have experienced some quarters of significant growth.” 
Hon David Cunliffe 
: Does this therefore prove that the Prime Minister’s prediction of an “aggressive” recovery and the statement: “The recovery has been quite considerable.” were in fact incorrect? 
Hon BILL ENGLISH 
: As the Prime Minister has said in response to probably half a dozen questions here in the House the quote was from March 2009 and reflects the fact that there had been a 2.5 percent contraction in the economy in the previous year. Subsequent to that the economy grew by 1.9 percent which was a welcome increase in economic growth. 
Amy Adams 
: What other factors are influencing the nature of the recovery? 
Hon BILL ENGLISH 
: As Dr Bollard and others have pointed out a major factor in the pace of the recovery is that New Zealanders have adjusted their spending and saving habits very quickly and are now saving rather than spending. This is contributing to a much-needed rebalancing of the economy. However in the short term it does mean a slightly more subdued recovery. The Government’s 1 October tax changes support this much-needed rebalancing by tilting incentives towards earning and saving and away from the housing speculation rampant borrowing and spending of the last decade. 
Hon David Cunliffe 
: Was he therefore correct when he said that John Key’s prediction of an aggressive recovery was merely “aspirational” and that “I wouldn’t want to say he’s wrong but he’s setting a high hurdle here and it’s our job as a government to meet those expectations … a big focus there for the Government is replacing the jobs that have been lost”; if not does he agree that unemployment numbers showing that job losses increased by over 500 each week since he has been in office point to a failure to meet those expectations? 
Hon BILL ENGLISH 
: I do agree with the expectations and in respect of job losses as was pointed out in the House last week the number of people on the unemployment benefit currently is still less than it was for over half of the time that Labour was in office. As the member knows when there is a significant recession unemployment goes up. I am pleased to say the Government is playing its part by spending billions on infrastructure which is underpinning the employment of thousands of skilled and unskilled people. 
Hon David Cunliffe 
: Which aspect of the recovery has been aggressive—unemployment staying above 6 percent compared with the 3.4 percent achieved under Labour; recent GDP growth of 0.2 percent which is less than a quarter of the Reserve Bank’s prediction; declining business confidence; or housing prices that have continued to fall? 
Hon BILL ENGLISH 
: As I pointed out in answer to an earlier question the economy did turn round aggressively from a sharp recession into economic growth and now the recovery is somewhat qualified by the fact that as I have pointed out a number of times New Zealanders are saving much more strongly than perhaps some had anticipated. If we save a dollar we cannot spend it. That is why things are a bit tough for retailers and the construction industry but in the long run it is the right kind of adjustment—more saving less borrowing; the opposite to that member’s policies. 
Hon David Cunliffe 
: Does he agree with Governor Bollard’s concern expressed to the Finance and Expenditure Committee last week about the decline in business lending by the New Zealand banking system and the thus dramatic decline in New Zealand manufacturing activity; if so does he have a plan for dealing with either of those matters? 
Hon BILL ENGLISH 
: I do agree with the concern about the decline in business lending and that of course is a product of a couple of things. One is the fact that New Zealanders are saving more and spending less. Therefore retail and construction businesses will not have the demand for borrowing simply because they do not see the opportunities for growth. In the long run the Government has a wide-ranging economic programme designed to lift productivity and confidence and we are confident that in time business investment will begin to flow. We will do everything we possibly can to encourage businesses to invest and employ. 
Amy Adams 
: What steps has the Government taken to pull the economy out of the recession that started in early 2008 and put it on the road to recovery? 
Hon BILL ENGLISH 
: In the short term the Government has run substantial deficits in order to cushion New Zealanders from the effect of what has been a fairly sharp recession to the extent that this year we will run a $13 billion deficit supporting Government investment in infrastructure and continuity of public services. We have also implemented significant tax reform including increasing GST and reducing taxes on savings on incomes on exports and on investments. I am pleased to say those tax cuts are being very well received.