Robertson Grant: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeRobertson Grant: Oral Questions — Questions to Ministers[Sitting date: 21 July 2015. Volume:707;Page:5109. Text is incorporated into the Bound Volume.]6.GRANT ROBERTSON (Labour—Wellington Central)to the Minister of Finance: Does he agree with the Prime Minister that bad news about the New Zealand economy is overblown and that while dairy prices are down “95 percent of our economy is not involved in that”?Hon BILL ENGLISH (Minister of Finance):Yes.Grant Robertson: How does he reconcile his support for the Prime Minister’s statement with the following statement also made by the Prime Minister: “When things are going well on our farms this flows through into the small towns the provincial cities and ultimately into our big cities. Conversely when the primary sector sneezes the New Zealand economy catches a cold.”?Hon BILL ENGLISH: Pretty easily actually. There is no doubt that significantly lower dairy prices for longer than expected will have some dampening effect on the economy. But unfortunately for the member who gives the impression that the dairy industry is about half of the New Zealand economy he should listen to the Prime Minister who points out that it is around 5 percent of GDP.Grant Robertson: Does he agree with former National agriculture Minister David Carter who said: “South Africa has diamonds Australia has minerals Saudi Arabia has oil and in New Zealand we have farms based on pasture.”; if so how does that fit with the 95 percent of New Zealanders not being affected by plummeting dairy prices?Hon BILL ENGLISH: Of course I agree with the former National Party agriculture Minister. He is very well-informed and very well-travelled and has great insight into the world economy. But even that former Minister will be aware of the facts which are that the dairy industry is around 5 percent of GDP and eventually the finance spokesman for the Labour Party will avail himself of the facts.Grant Robertson: How can he claim that 95 percent of New Zealand is not affected by the plummeting dairy price when the 2014-15 payout means for example $150 million less in the Whakatāne and Kawerau economy $190 million less in the Ōtorohanga community and $150 million less in the Waimate community or are concerns in those communities just overblown?Hon BILL ENGLISH: No and those communities and others like Southland and mid Canterbury where there is a concentration of dairy production of course are going to be affected by a payout that is likely to be lower than people expected and may stay lower for longer. That is pretty obvious. But at the same time each of those regions for instance will benefit from a stronger tourism industry where the drop in the value of the New Zealand dollar means that tourism is actually doing pretty well. The member when he goes to those regions needs to make sure that he understands the breadth of their economies and not focus just on the dairy industry.Grant Robertson: Can the Minister confirm that he is saying to the people of Whakatāne and Kawerau that they will get around $150 million from tourists flocking to their region to make up for the loss in dairy profits?Hon BILL ENGLISH: No I did not say that. I am simply pointing out to the member that when the dairy industry is less than 20 percent of exports and you go to any region of New Zealand that prides itself—as those regions do—on their exporting capacity he will find that there are other industries that may be balancing off some of the negative impacts of the dairy industry. For instance in the Bay of Plenty kiwifruit is going pretty well. But of course I agree with the member that the lower dairy price will have a significant impact on the dairy farmers and on the servicing industries related to that farming.Grant Robertson: Is he really dismissing as overblown a 40 percent drop in dairy prices since March; a forecast of a $3.75 payout for 2015-16; a 20 percent decline in commodity prices in the year to June; sharply declining public confidence consumer confidence business confidence and employment confidence; or we do have to rely just on his and the Prime Minister’s post-holiday vibe to get us through?Hon BILL ENGLISH: Well I can see that the member has learnt not to use the word “crisis” because when Labour says something is a crisis it always comes right—if it has not already. So look there are certainly risks to the economy from the global economy but the point we are making I suppose is that although some prices are low others are high or have not gone down and the automatic stabilisers—a lower exchange rate and flat-to-falling interest rates—are coming into play. So we would expect that New Zealand remains on track for moderate sustainable growth of 2 to 3 percent.Grant Robertson: Is it really correct that the Government’s Pollyanna position on the economy is a result of his—as the Prime Minister said—“feeling better” after his trip to China; and are we now going to make economic policy based on what he is feeling in his waters?Mr SPEAKER: The Hon Bill English—with a fair bit of licence.Hon BILL ENGLISH: I am certainly not going to make it on what that member might be feeling in his waters. It is just a matter of keeping in context the breadth of the New Zealand economy. The member would like to think it is entirely focused on exporting one product to one country but that is not in fact the case. It has a broad base much of which is succeeding at the moment—a 14 percent growth in IT year on year big increases in kiwifruit record tourist numbers highest sustained migration flows for quite some time a wine industry with exports roughly three times what they were 10 years ago—and a dairy industry that is really struggling. That is the breadth of the New Zealand economy and we are sufficiently resilient to absorb the shock from lower dairy prices and sustain moderate growth of 2 to 3 percent.