Brash Don: Questions for Oral Answer — Questions to Ministers 
Brash Don: Questions for Oral Answer — Questions to Ministers 
[Volume:629;Page:1140] 
4.  
Dr DON BRASH (Leader of the Opposition) 
 to the  
Prime Minister 
: Does she stand by her statement that “We need a strong economy to deliver the living standards the services and the quality of life which the citizens of our first world country expect”; if so does she agree that increasing the incomes of New Zealand workers depends in the long term primarily on increasing productivity? 
Rt Hon HELEN CLARK (Prime Minister) 
: 
 Yes. And yes productivity improvements are critical to lifting New Zealand’s economic performance. Such improvements are not achieved by slashing workers’ and environmental protections as the member favours. 
Dr Don Brash 
: Why given her acceptance of the crucial importance of improving productivity does she seem totally unconcerned about the fact that productivity per hour worked in New Zealand increased by a miserable 0.8 percent per annum in the 5 years to September last which is substantially lower than productivity growth in Australia and other developed countries? 
Rt Hon HELEN CLARK 
: I should think it is not uncoincidental that New Zealand has had a large surge in employment and sharply falling unemployment. A lot of people come into employment at the lower end of the wage ladder and skills ladder. Our objective over time is to lift those skills levels to contribute to raising productivity. 
Dr Don Brash 
: Can the Prime Minister name one single economist who believes that with present policies productivity growth in New Zealand will enable New Zealand incomes to overtake those in Australia within one decade two decades or even three decades; if so who is that economist? 
Rt Hon HELEN CLARK 
: I would advise the member to consider that under a Labour Government GDP per capita grew at a rate nearly 40 percent higher than Australia’s. When that member was running monetary policy and contributing to failed Government policies our GDP per capita under a National Government over the relevant 5-year period grew 40 percent more slowly than Australia’s. 
Dr Don Brash 
: I raise a point of order Madam Speaker. The Prime Minister made no attempt at all to answer that question. I asked whether she could name any economist—any single economist—who thought that on present trends New Zealand incomes would overtake those in Australia within one two or even three decades. A yes or no answer was required. 
Madam SPEAKER 
: No the Minister is entitled to address the question and that is what the Minister did. She may not have answered it in the way the member wanted but there was an addressing of the substance of the question. 
Rt Hon Winston Peters 
: Is it not a fact that there was such an economist who rejected the incremental approach of Australia post-1983 preferring of course the Douglas - Ruth Richardson approach which has taken us to the position that we are now in and that that economist or so-called economist was one Don Brash? 
Rt Hon HELEN CLARK 
: Yes I believe that what the member said in his question is absolutely true. I also would not be able to name any economist who agreed with “Dr Doom” opposite that we were heading for a prolonged recession. 
Madam SPEAKER 
: The Prime Minister in answering that question did not use the member’s correct name. Would she please do so in future. 
Gerry Brownlee 
: She should withdraw. 
Madam SPEAKER 
: The member wishes the remark to be withdrawn. Would the Prime Minister please withdraw the term “Dr Doom”. 
Rt Hon Helen Clark 
: Cheerfully Madam Speaker. I withdraw. 
Sue Bradford 
: Has the Prime Minister seen a Treasury report dated March 2004 on the increase in income for young workers that demonstrated no negative effects on youth employment from a substantial increase in the youth minimum wage and is she aware of any reasons why young people should earn lower wages for doing exactly the same work as other workers? 
Rt Hon HELEN CLARK 
: I understand that the first part of the member’s question which is a factual assertion is indeed true. Contrary to the advice of all those who have advised for years that if the minimum wage went up unemployment would grow in fact as I said in my speech yesterday 293000 more Kiwis are working today than were 6 years ago before steady increases in the minimum wage began under a Labour-Progressive Government. I want to tell the member that I am aware of her member’s bill. Labour will be supporting that to a select committee so that the evidence for and against can come out. 
Hon Dr Michael Cullen 
: Has the Prime Minister received any advice from any economist including Dr Don Brash to explain why the Australian economy has had higher productivity growth despite a more tightly regulated labour market 4 weeks’ annual holiday for all workers a higher tax rate for high incomes and tighter regulations of markets such as the telecommunications market; if not is that why the Government has ignored that continual bleat of advice from the Opposition? 
Madam SPEAKER 
: Before the right honourable Prime Minister responds I remind members that questions are asked in silence and that question was not. 
Rt Hon HELEN CLARK 
: As the Minister of Finance suggested the Australian experience is indeed instructive in that paying workers more highly and having more protections is certainly not running counter to having a strong economy and good growth rates. 
Dr Don Brash 
: Is it not true that on the basis of present trends in productivity on both sides of the Tasman New Zealand workers can never expect to enjoy the income levels of Australian workers and indeed can expect to continue declining relative to Australian workers? 
Rt Hon HELEN CLARK 
: If anything like the performance of the last 5 years was repeated with New Zealand GDP per capita growing far higher—40 percent higher—than Australia’s indeed over time we would catch up. I say that the member’s tune on this issue of comparisons has not changed in close to 30 years since he wrote to his mother in 1979 that he had a terrible fear that the economic gap would become so vast between New Zealand and Australia that the skill drain would accelerate. He said that if that were to happen New Zealand society as we now know it might not survive. I say to Dr Brash we are here—and thriving. 
Dr Don Brash 
: Why did the Prime Minister not haul her Minister of Finance into line when he condescendingly dismissed Treasury’s advice on how to improve productivity in New Zealand as “an ideological burp”; or does she agree with his assessment? 
Rt Hon HELEN CLARK 
: I absolutely agree with Dr Cullen that low-tax low-wage low-skill low-value economies deregulated and privatised do not contribute to a thriving New Zealand. That is why we do not follow Dr Brash’s policies. 
Dr Don Brash 
: Does the Prime Minister think the transformation of the New Zealand economy is under way given that ANZ National Bank believes that the New Zealand economy may well have gone backwards in the December quarter and that the survey conducted by the Institute of Economic Research showed that business confidence was at its lowest level in 35 years; if she does believe that that is what transformation means how does she explain it? 
Rt Hon HELEN CLARK 
: Indeed a process of economic transformation sees New Zealand forecast to come through this dip in the business cycle at the lowest growth of 1.7 percent. When Dr Brash was helping the National Party in his capacity as Governor of the Reserve Bank we bottomed out at under zero thanks to that combination of policies at the bottom of the business cycle. 
Sue Bradford 
: I seek leave to table a paper from Treasury dated 2004 dealing with the impacts of raising the youth minimum wage on the labour market. 
Document by leave laid on the Table of the House.