Barry Maggie: Questions for Oral Answer — Questions to Ministers 
Text is incorporated into the Bound Volume 
Barry Maggie: Questions for Oral Answer — Questions to Ministers 
[Sitting date: 19 March 2013. Volume:688;Page:8601. Text is incorporated into the Bound Volume.] 
1. 
MAGGIE BARRY (National—North Shore) 
 to the  
Minister of Finance 
: What reports has he received on the economy? 
Hon STEVEN JOYCE (Acting Minister of Finance) 
: 
 Today the International Monetary Fund released its preliminary concluding statement on New Zealand. The report concludes that New Zealand’s fiscal reduction path strikes the right balance between limiting debt increases while sustaining economic growth. The report says: “We regard the planned pace of … deficit reduction as striking the right balance between sustaining output growth and limiting public debt growth and consistent with a framework where monetary policy plays a primary role in managing aggregate demand. The benefits of the plan are many.” 
Maggie Barry 
: What does the IMF say are the benefits of the planned reduction in the Budget deficit? 
Hon STEVEN JOYCE 
: The IMF cites four benefits: firstly it withdraws fiscal stimulus at the right time by making room for the expected increases in private sector and earthquake-related construction spending; secondly it reduces pressure on monetary policy— 
Andrew Williams 
: Who wrote this? 
Hon STEVEN JOYCE 
: —thirdly it creates fiscal space to manage increasing age and health-related costs and to cope with negative shocks; and fourthly it helps raise national savings and reduce the current account deficit. And in answer to the member over there it was written by the IMF. 
Maggie Barry 
: What are the key risks the IMF identifies for the New Zealand economy and what are the options for managing those risks? 
Hon STEVEN JOYCE 
: The IMF identifies two main near-term risks to the New Zealand economy. These are potential weaknesses or a worsening in the financial conditions in the world economy. The IMF also identifies risk in the New Zealand housing market noting that supply bottlenecks persist and prices remain elevated. The IMF notes that New Zealand has room to respond to shocks with its monetary policy and the level of public debt leaves room for fiscal policy response. The floating New Zealand dollar is also seen as an effective buffer. The IMF also says that our fundamentals have improved since the global financial crisis. Household and business balance sheets have strengthened and banks have reduced their foreign funding and been assisted by a strong growth in deposits and slower growth in credit. 
Maggie Barry 
: What does the IMF say about the value of the New Zealand dollar? 
Hon STEVEN JOYCE 
: The IMF shares the Government’s view that the dollar is at a high value largely because of factors outside our control. In particular the strength of the New Zealand dollar is determined by the relative weaknesses of other currencies and other economies many of which are printing money. As it says if global monetary policy were to become less stimulatory the exchange rate would likely depreciate over time. The IMF also notes that the Government’s return to surplus is easing pressure on the exchange rate by boosting national savings. 
Hon David Parker 
: Does he agree with the IMF that “… New Zealand has run persistent current account deficits resulting in net external liabilities which are high by international standards. The deficit is expected to widen this year despite relatively strong terms of trade …”? 
Hon STEVEN JOYCE 
: Yes and I would note that those were largely due to the previous Government when the balance of payments deficit rolled out to over 8 percent of GDP. I really think the member should stop this line of questioning because all he does is point out that the Opposition are lousy economic managers. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. The Minister was asked about the future projections so surely he cannot go back to a former Government from 4 years ago and think he can get away with it. 
Mr SPEAKER 
: Order! He referred to the IMF report which talked about persistent current account deficits over many years. I think the question was adequately addressed.