Parker David: Questions for Oral Answer — Questions to Ministers Questions to MembersText is incorporated into the Bound VolumeParker David: Questions for Oral Answer — Questions to Ministers Questions to Members[Sitting date: 20 February 2014. Volume:696;Page:16182. Text is incorporated into the Bound Volume.]2.GRANT ROBERTSON (Labour—Wellington Central) on behalf ofHon DAVID PARKER (Deputy Leader—Labour) to thePrime Minister: Does he stand by his statement that “when this Government came in there were predictions that unemployment would rise to over 10 percent”; if so in the December 2008 Economic and Fiscal Update what level did Treasury forecast that unemployment would peak at?Hon BILL ENGLISH (Deputy Prime Minister): on behalf of thePrime Minister: Yes. In early 2009 the New Zealand Institute warned that unemployment could rise to over 11 percent. In answer to the second part of the member’s question the December 2008 Economic and Fiscal Update forecast peak unemployment of 6.4 percent. However 6 months later in Budget 2009 once the full implications of the global financial crisis were understood unemployment was forecast to peak at 7.5 percent. Fortunately and partly because of good policy unemployment did not get that high.Grant Robertson: Is he aware that the projections that the New Zealand Institute were relying on to say that there would be a forecast of 10 percent come from a paper that has been totally discredited because of a basic coding error in a spreadsheet that makes the projections completely wrong?Hon BILL ENGLISH: No I was not aware of that because I am less concerned about the 2008 unemployment forecast than are Labour Party members who seem to be obsessed with trying to defend their terrible economic record.Grant Robertson: To assist the Minister of Finance I seek leave to table an article not easily found from dailyfinance.com which says: “Math in a Time of Excel: Economists’ Error Undermines”—Mr SPEAKER: Order! The document has been suitably described on the basis that I am assured it is not easily found. I will put the leave. Leave is sought to table that document. Is there any objection? There is not.Document by leave laid on the Table of the House.Grant Robertson: Is it in fact correct that unemployment has been above the Treasury forecast since National took office and that actual performance against the forecast has been getting worse and worse?Hon BILL ENGLISH: I think it is typical of the Labour Party’s obsession with measurement rather than with the real economy that its measure of anything is how it connects to the Treasury forecast. In fact unemployment is dropping and in a fewmonths will be lower than Australia’s. I can remember that member and others spending a number of years attacking the Government because unemployment was higher than Australia’s. I hope they will get up and compliment the Government and New Zealand businesses and workers on getting unemployment lower than Australia’s.Grant Robertson: I raise a point of order Mr Speaker. Although it was interesting to hear the Prime Minister’s views—Mr SPEAKER: Order! What is the point of order?Grant Robertson: —he did not in fact address the very specific question.Mr SPEAKER: I invite the member to repeat his question.Grant Robertson: Thank you. Is it in fact correct that unemployment has been above the Treasury forecast since National took office and that actual performance against the forecast has been getting worse?Hon BILL ENGLISH: No.Grant Robertson: It is.Hon BILL ENGLISH: No and I do not care what comparison there is with the 2008 unemployment forecast. On “Planet Labour” that matters but in the rest of the world 2014 is what matters.Jami-Lee Ross: In 2008 when the New Zealand economy had gone into recession a year before the global financial crisis—Mr SPEAKER: Order! Can the member just ask his supplementary question without the lead-in.Jami-Lee Ross: What other forecast did Treasury make in its 2008 Economic and Fiscal Update when the New Zealand economy had gone into recession a year before the global financial crisis?Hon Trevor Mallard: I raise a point of order Mr Speaker. That Minister was not responsible for the 2008 estimates. They were for a period before this Government.Mr SPEAKER: No. I have listened to the question and on this occasion the question is in order and can be answered by the Minister.Hon BILL ENGLISH: There were some alarming aspects of the 2008 Economic and Fiscal Update. Treasury forecast never-ending fiscal deficits and that under the policies of the previous Labour Government New Zealand would never get into surplus. It projected that Government debt would reach 50 percent of GDP by 2020. In fact it will be well less than half of that figure if the John Key - led Government is able to persist with its sensible policies.Grant Robertson: Why is Treasury forecasting that in 2018—10 years after his Government came into office—unemployment will still be higher than when he took office?Hon BILL ENGLISH: We can always argue about Treasury forecasts and I often do. If the Labour Party thinks it is going to win the next election by arguing that it managed the economy perfectly in 2008 then we will win by even more than people think we will now.Jami-Lee Ross: What recent reports has he seen on the outlook for growth and employment in the economy?Hon BILL ENGLISH: There have been a lot of reports on this but clearly because Labour Party members are more interested in 2008 they will not have read them so I might have to tell them about what is in them. In 2013 66000 jobs were created. There are 139000 more jobs in the economy than 4 years ago. The Purchasing Managers’ Index for manufacturing which has apparently been in crisis has expanded for 16 consecutive months and employment in manufacturing expanded in 2013. We are still waiting for the report from the mock select committee that conducted an inquiry into theso-called manufacturing crisis. In its half-year update Treasury is forecasting growth above 3 percent and employment growth over 2 percent.Grant Robertson: Does he agree with Treasury last week which said: “there are not any impediments to the rate of unemployment falling back to levels that existed in the mid-2000s.”; if so why is unemployment forecast to remain higher than the mid-2000s for the remainder of this decade under his Government’s policy settings?Hon BILL ENGLISH: There are a couple of reasons I can think of as to why unemployment has dropped a bit more slowly than we would all like. One is that the relatively low level in 2008 was built on a debt-funded consumption splurge which was always unsustainable and many New Zealanders who were led to believe they had sustainable jobs by the Labour Party in fact did not. The other reason is that there was a debt-funded Government spending splurge in the years running up to 2008 and that also had an artificial unsustainable impact on the level of unemployment. In the next 5 years we are going to be creating real sustainable jobs.Grant Robertson: What does he say to the editor of theWaikato Times who said that Mr Key had seriously exaggerated his Government’s accomplishments in recalling what had happened in recent years given the growth in unemployment in that region; and why will the Prime Minister not just be upfront and honest with New Zealand about unemployment?Hon BILL ENGLISH: The Prime Minister has never been anything less than upfront and honest about unemployment. The fact is that the conditions for reducing unemployment and for faster employment growth now are positive. One thing that is a big risk to that would be the prospect of the Labour-Greens ever getting into Government because they are expressly transparently and honestly anti-jobs.