Parker David: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeParker David: Questions for Oral Answer — Questions to Ministers[Sitting date: 15 May 2013. Volume:690;Page:9934. Text is incorporated into the Bound Volume.]5.Hon DAVID PARKER (Labour) to theMinister of Finance: Does he agree that New Zealand is currently operating as a two-speed economy and that the current growth mix is not sustainable; if not why not?Hon BILL ENGLISH (Minister of Finance): No. In some respects the Government of course does not get to pick the current growth mix. The Canterbury earthquake was not forecast. It will have an impact on New Zealand’s growth mix for the next 6 or 7 years. The other reason that I do not agree though is that in the December quarter 15 of the 16 measured industries including manufacturing showed growth. We are not seeing that growth leading to general inflation or interest ratepressures as yet. Auckland and Christchurch property markets are showing significant price increases and that is some concern which is why the Government is taking steps to free up the supply of housing and reduce pressure on rising house prices. Overall we are seeing reasonably broad-based and balanced growth—certainly more balanced and sustainable than it was in 2008 before the global financial crisis—but we have some way to go to get an economy that is more sustainably driven by export growth and strong savings and investment.Hon David Parker: Does the Minister agree with Westpac Chief Economist DominickStephensthat “We also continue to see big regional disparities reflecting New Zealand’s two-speed economy.”?Hon BILL ENGLISH: The Government has itself just published some regional GDP figures which are creating some debate. I do not agree with the economist that there are big regional disparities. But certainly those that have strength in industries such as oil and gas and the dairy industry are doing well. They would be worried about Labour-Green policies which are aimed at shutting down those industries.Hon David Parker: Has he seen the International Monetary Fund’s forecast that New Zealand will have the worst current account deficit in the developed world this year and every year through to 2018 and if the IMF is anywhere close to the mark does not that prove absolutely he has failed in his stated ambition to rebalance the economy?Hon BILL ENGLISH: No. I do not agree with that. I have seen the IMF figures. Of course the irony of this criticism from the Opposition as pointed out in the Business and Economic Research report that Opposition members were waving around a few days ago is that if the economy did adjust faster to exports and savings it would be at the expense of household consumption and household incomes. So they cannot have it both ways saying that the Government is not doing enough to ensure households have better incomes and then turn round and say it has not rebalanced the economy fast enough by cutting household consumption and incomes.Hon David Parker: Well if he does not think having the worst current account deficit in the world is a problem is he aware that the forecast in his last Budget—Hon Steven Joyce: Oh what! That was when you were in charge.Hon David Parker: Actually it was not Mr Joyce. You need to check your facts.Mr SPEAKER: Order! Would the member—Hon David Parker: Is he aware that the forecast in the last Budget was that unemployment would presently be 5.7 percent that his Budget 2 years ago predicted unemployment would now be 4.8 percent and given that unemployment is now above 6 percent nationally and 7 percent in Auckland does he consider that to be successful management of the New Zealand economy?Hon BILL ENGLISH: Well if it is a measure of it the worst current account deficit under this Government which is what it is today is less than half what it was for the last 3 years that the Labour Government was in power.Hon David Parker: Does the Minister of Finance agree that a capital gains tax would reduce distortions in investment signals and drive investment from rental house price speculation into productive export industries?Hon BILL ENGLISH: The one proposition we have seen for a capital gains tax is the proposition put forward by the Labour Party and of course what it does is exempt most housing stock so it would have no impact. In fact it remains a tax—Hon David Parker: I raise a point of order Mr Speaker. That was not my question. My question and I am happy to repeat it—Mr SPEAKER: Order! I think on this occasion the best way forward is for the member to repeat the question.Hon David Parker: Does he agree that a capital gains tax would reduce distortions in investment signals and drive investment from rental house price speculation into productive export industries?Hon BILL ENGLISH: No I do not. The proposition we have seen which is Labour’s proposition exempts most housing not rental housing. It remains in effect a tax on the growth of businesses; that is actually what it is. It will not have much impact on the housing market but it will certainly tax all gains from growing a business reinvesting the profits and employing people. In that context it is an anti-jobs tax.