Cosgrove Clayton: Questions for Oral Answer — Questions to Ministers 
Cosgrove Clayton: Questions for Oral Answer — Questions to Ministers 
[Volume:620;Page:15449] 
1. CLAYTON COSGROVE (Labour—Waimakariri) 
 to the  
Minister of Finance 
: Has he received any recent reports on the New Zealand economy? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 With some trepidation I answer. I have received a number of reports highlighting the strength of the New Zealand economy. Rating agency Standard and Poor’s has today reconfirmed our double AA credit rating which it states is based on this Government’s sturdy financial management. The National Bank’s  
Business Outlook 
 observes: “Good news about our economy seems to be everywhere.” Although the Reserve Bank raised interest rates today it did so because growth is so strong. [ 
Interruption 
] 
Mr SPEAKER 
: That is the one warning today. 
Clayton Cosgrove 
: What other reports and analyses has he received in respect of the economy? 
Hon Dr MICHAEL CULLEN 
: I received a report that New Zealand’s legal system education system and political environment are so strong that they would support the creation of an offshore banking centre in New Zealand. That came from the Opposition spokesperson on finance. As I am sure he is aware there are also considerable reputational risks with regard to offshore banking centres. 
John Key 
: Can the Minister confirm for the House that he has just announced in his answer to the question the interest rate rise that we assumed the Governor of the Reserve Bank would be announcing tomorrow? 
Hon Dr MICHAEL CULLEN 
: I am following upon all the background from economists who are all projecting that interest rate tomorrow—[ 
Interruption 
] All I can say is that if there is not one I will be very surprised indeed this time. 
Paul Adams 
: Does the Minister accept that given that 85 percent of businesses in New Zealand are small to medium in size their worrying rate of failure—as depicted by the fact that only 27.4 percent make it beyond 7 years—is a threat to the economy and is he willing to commit the Government to reversing this trend? 
Hon Dr MICHAEL CULLEN 
: The member should await a World Bank report that is coming out in the not too distant future that will indicate that this country—without giving the full details—will rank so high in terms of ease of doing business that complaints about compliance costs will look very very foolish indeed. But it is the nature of small businesses that they often have a relatively short lifespan. That is not peculiar to New Zealand; it is true in almost every developed country in the world that I am aware of. 
Rt Hon Winston Peters 
: Has the Minister received any information at all suggesting that the Governor of the Reserve Bank will put up interest rates; if that is so how on earth could the governor be complying with this country’s law? 
Hon Dr MICHAEL CULLEN 
: The governor certainly has not told me what his intentions are in terms of the announcement tomorrow. I have had advice from Treasury that there is 100 percent unanimity amongst bank economists that interest rates are going to rise. 
Hon Richard Prebble 
: As the Minister has been willing to give us his views on the economy and has told us that he is expecting an interest rate and given that the Australian Finance Minister is quite prepared to publicly indicate prior to a statement by the Reserve Bank whether he considers interest rates should go up will the Minister advise the House whether he believes an interest rate rise is justified tomorrow; if so why? 
Hon Dr MICHAEL CULLEN 
: No there is an enormous difference between Australia and New Zealand in that respect. Apart from anything else a senior Australian Treasury official sits on the committee that makes the final decision around Australian interest rates. In New Zealand the decision is made by the governor alone. 
Peter Brown 
: If the economy is so strong can we take it that there will be no need to increase the tax on petrol as the Government proposes to do later this year? 
Hon Dr MICHAEL CULLEN 
: The increase is due to come into force next year. That is required for increased revenue to be devoted to roading. I note that Standard and Poor’s does give a warning in terms of our fiscal position that it could come under threat from unsustainable spending promises in the run-up to next year’s election. 
John Key 
: Can the Minister clarify whether he has been briefed by the Governor of the Reserve Bank and whether it is possible that he has made a quite serious breach of the protocol he should be following? 
Hon Dr MICHAEL CULLEN 
: The Governor of the Reserve Bank always briefs the Government in advance of any announcement but the governor never in my experience—and I am sure the member could refer to somebody who occasionally flits into this place—actually tells the Government what he is going to do. I am relying for the first time in my experience upon a unanimous view of bank economists about not only what will be done but about what should be done. 
Peter Brown 
: Is the Minister aware of the Allen Consulting Group’s report that advocates Government investment in four roading projects that would return “a total benefit net of costs to the New Zealand economy in excess of $1.5 billion annually in 2012”; if he is aware can we expect him to implement such a report? 
Hon Dr MICHAEL CULLEN 
: A fairly high proportion of the projects that are contained in that report are either done—and if the member reads the report he will notice a rather strange marginal note at one point which the authors forgot to take out which notes something has been done—or have already been planned to be done over the next few years. 
John Key 
: What is the point of the Governor of the Reserve Bank announcing a rate increase tomorrow when the Minister of Finance has already told the House 24 hours earlier? 
Hon Dr MICHAEL CULLEN 
: Of course one could be wrong but I would be very surprised. 
Rt Hon Winston Peters 
: Will the Deputy Prime Minister admit that there is no difference between the present Government’s and the National Party’s monetary policies and that there is a belief that if one wants to somehow get on top of consumption and rising house prices one merely chokes the economy with high interest rates paid for by provincial New Zealanders? 
Hon Dr MICHAEL CULLEN 
: The policy targets agreement has been revised twice under myself as Minister of Finance. The previous policy targets agreement that was revised was signed by that member. 
Gerry Brownlee 
: I raise a point of order Mr Speaker. Could you advise me on what would be the best process to ask the Minister of Finance whether he would allow his  
Hansard 
 to be made available to the House before the end of question time? 
Mr SPEAKER 
: You can approach him directly.