Reti Shane: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeReti Shane: Oral Questions — Questions to Ministers[Sitting date: 02 July 2015. Volume:706;Page:5059. Text is incorporated into the Bound Volume.]1.Dr SHANE RETI (National—Whangarei)to the Minister of Finance: What reports has he received on the international economy and its effect on New Zealand’s economy?Hon STEVEN JOYCE (Associate Minister of Finance)on behalf of theMinister of Finance: Overnight the global dairy auction registered a 5.9 percent fall in the price index compared with the last auction a fortnight ago. That was the eighth consecutive auction to see a fall and the average global dairy trade price is now back to similar levels to those seen in late 2014 or around 30 percent lower than the recent peak in early May. Offsetting that somewhat is the fact that the trade-weighted New Zealand dollar has fallen 19 percent in recent months. Lower interest rates are also helping farmers to some extent. This week financial markets have also had to digest the unsettling news in regard to the Greek economy with the Greek Government being in default on a payment to the IMF and volatility in the Chinese equity markets. Again these highlight that we cannot be immune to changes to sentiment and activity across the global economy.Dr Shane Reti: How well positioned is New Zealand in the event that recent global market turbulence and weakness should deteriorate further?Hon STEVEN JOYCE: We have in recent weeks been reminded that notwithstanding New Zealand’s strong relative economic performance and outlook parts of the international economy are very fragile. The good news is that we are better placed to weather unexpected developments than we were back in 2008. For 5 consecutive years now Kiwi households have been saving rather than over-borrowing. New Zealand’s net international investment position which measures this country’s international debt has strengthened considerably since 2009. Interest rates are back to near 50-year lows which helps businesses and households with a mortgage and every day we do the hard yards of managing our spending responsibly. We are on a clear track to surplus and to paying down debt. As members know this is very important in order to strengthen the resilience of our economy and protect our people.Grant Robertson: In light of that answer could the Minister tell us what the Government’s net debt position was in 2008 and what it is now; if he does not have the exact figures would he agree that it is slightly larger now than it was—Mr SPEAKER: Order! The first part of the question is quite in order.Hon STEVEN JOYCE: The member is deliberately misrepresenting New Zealand’s external position. The important position is the country’s net investment position—which was what I was stating in my answer—which has improved and strengthened considerably since 2009. Once again Mr Robertson shows that he is all about the Government and not about the country.Dr Shane Reti: How does New Zealand’s current economic performance compare with other developed economies?Hon STEVEN JOYCE: It is important that we do not talk New Zealand down although that is a favourite pastime of some members of this House. The reality is that New Zealand’s economic performance is currently stronger than many of the economies that we typically compare ourselves with. New Zealand’s 2.6 percent GDP growth in the year to March compares with 2.3 percent in Australia 2.4 percent in the UK 2.1 percent in China minus 1 percent in Japan and 1 percent in Germany.Hon Member: What about the last quarter?Hon STEVEN JOYCE: Perhaps the member might like to get himself a question. Average growth across the OECD group of rich economies was just 1.9 percent. So despite a number of global risks New Zealand is performing well by international standards and is heading in the right direction.Fletcher Tabuteau: Will he now concede that his Budget should be called “the plan that is already not working” as it was a Budget made using overly optimistic assumptions which in fact means that it is a Budget that will not work now reinforced ever so sharply by the loss of $1.2 trillion off the Chinese stock exchange since 12 June?Hon STEVEN JOYCE: No and it is important that the member notes the automatic stabilisers that do exist in the New Zealand economy—for example the exchange rate as I said in the answer to the primary question has dropped a trade-weighted level of around 19 percent and that helps to offset a decline in prices for commodity exporters. On top of that the Reserve Bank has the ability to reduce interest rates and we have seen that also. That is how a modern market economy deals with changes in international prices for its goods.Dr Shane Reti: What is the Government’s approach to strengthening the economy’s resilience in the face of recent turbulence and weakness in some global markets?Hon STEVEN JOYCE: Firstly of course the Government runs a conservative and sensible fiscal and monetary policy for New Zealand. It also remains focused on progressing its economic development plan for New Zealand. These things—like ultra-fast broadband to 80 percent of New Zealanders; like signing new free-trade agreements such as the Korean free-trade agreement and negotiating others like the Trans-Pacific Partnership; delivering on more skills that are relevant to industries in the areas of information and communications technology engineering and so on; rolling out key transport roading projects which improve the connectivity between our regions and our major ports and facilities; and reforming various regulations to provide certainty timeliness and cost-effectiveness in investment decisions—are part of the 350 action points making up the Government’s Business Growth Agenda a plan that is steadily delivering dividends for this country.James Shaw: With continuing falls in global dairy prices would he agree that Treasury’s downside economic scenario in the 2015 Budget Economic and Fiscal Update is turning out to be the reality; and how is he preparing New Zealand for the blowout of the current account deficit the loss of $26 billion of GDP out to 2019 and increased Government debt?Hon STEVEN JOYCE: No I do not think he is correct in relation to Treasury’s downside scenario. Although of course prices are dropping Treasury’s downside scenario actually made its prediction without a decline of the trade-weighted New Zealand dollar or short-term interest rates which has come to pass. As I said to the other member that actually has the off-setting for some of the decline in commodity prices. So the easing in monetary conditions does help to protect New Zealanders from the less rosy international developments and does help to off-set the negative impact on New Zealand exporters. As I say that is a slightly different track from the scenario he refers to.