Parker David: Questions for Oral Answer — Questions to Ministers 
Text is incorporated into the Bound Volume 
Parker David: Questions for Oral Answer — Questions to Ministers 
[Sitting date: 20 June 2012. Volume:681;Page:3134. Text is incorporated into the Bound Volume.] 
9. 
Hon DAVID PARKER (Labour) 
 to the  
Minister of Finance 
: What are the Treasury projections for New Zealand’s net international liabilities in 2016 as a percentage of GDP and in dollars and what is the increase in dollars from the end of the year ended 30 June 2011? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 New Zealand’s net international investment position has been a longstanding vulnerability for New Zealand. It has improved from the forecasts in 2009 that it would reach around 100 percent of GDP to stand at 70.9 percent of GDP at 31 March 2012—still high by world standards. Looking ahead Treasury forecasts that our position will reach 80.8 percent of GDP by 31 March 2016 just below the level it was in 2009. That amounts to a $204.2 billion liability and is an increase of $67 billion from 30 June 2011. 
Hon David Parker 
: Given that Treasury’s projections show New Zealand’s net international liabilities growing—according to your figures—by $67 billion does he agree with the ANZ commentary today that “our external debt levels remain high and the current account deficit is moving back towards the 5 percent plus danger zone.”? 
Hon BILL ENGLISH 
: I certainly agree that our net international liabilities remain high. The primary driver of those has been high household debt—that is New Zealanders paying high prices for houses and borrowing most of the money offshore ultimately to pay for those houses. That problem has built up over 15 years and it is going to take quite a lengthy period where New Zealand earns more— 
Dr David Clark 
: And a change of Government. 
Hon BILL ENGLISH 
: —than it spends in order to reduce that liability. Actually changing the Government will certainly make it worse because it is still lower than it was in 2009 when we inherited a very bad external liability problem generated by Labour in the best decade the globe had seen in a long time. 
Hon David Parker 
: Given that the BNZ’s summation of this is that the surging deficit threatens New Zealand’s credit rating and given that it forecasts that the current account deficit is going to rise to 8.3 percent of GDP does the Minister have any other plans other than those that he has already implemented to curb this problem? 
Hon BILL ENGLISH 
: We are implementing a pretty comprehensive plan to influence the balance in the New Zealand economy— 
Hon David Parker 
: No to universal KiwiSaver. 
Hon BILL ENGLISH 
: —and influence the decisions made by lots of New Zealanders. 
Hon David Parker 
: No to tax reforms. 
Hon BILL ENGLISH 
: The member mentions tax reform and savings. Back in 2010 we put in place a comprehensive tax package that reduced the tax on savings and work and increased the tax on property and consumption. In respect of savings the KiwiSaver contributions will rise on 1 April next year. The good news is that New Zealanders are now saving a much greater proportion of their income than they ever did under the previous Government. In fact under the previous Labour Government New Zealand had the worst savings rates it has ever had at a time when the economy was meant to be as good as it had ever been. 
Louise Upston 
: How does New Zealand’s current net international liabilities position compare with that of recent years? 
Hon BILL ENGLISH 
: First of all we need to acknowledge that New Zealand’s net international liabilities remain high by world standards. They are the product of particularly around 10 years of overconsumption and excessive borrowing to buy houses. Statistics New Zealand announced today that our net international liabilities were 70.9 percent of GDP at 31 March 2012. During the 2000s these liabilities increased significantly from around 64 percent of GDP in 2001 up to 80 percent by the end of 2008. There is certainly much more work to do. We are making some progress and I would have to say that I am slightly more optimistic than the forecasts that the member is referring to.