Groser Tim: General DebateText is incorporated into the Bound VolumeGroser Tim: General Debate[Sitting date: 19 August 2015. Volume:707;Page:5944. Text is incorporated into the Bound Volume.]Hon TIM GROSER (Minister of Trade): Plan B for the New Zealand economy—plan B—this wonderful mysterious plan B. I have been asking all my friends and colleagues who owns the plan B what is plan B and how would it work? It appears it is a little like hunting for a mysterious animal like a unicorn—everyone agrees it would be a beautiful thing but nobody has actually ever seen it. I mean my office staff googled “plan B” and came out with a thousand pages—about 80 percent of which is Grant Robertson talking about the need for a plan B—but nobody has yet identified what a plan B would be.So we do not have a plan B. No no; we have a plan A. We have a plan A which has worked extremely well for New Zealand in the years that the New Zealand public gave us their confidence and we came into Government. I am sure as we continue to execute and implement plan A that it will continue to be a very sound basis.But trying to work out what plan B was—well I have to start from a speculative point of view that presumably plan B is not plan A. So what are the foundation stones of plan A? Well plan A rests in my view on three central pillars: first of all an orthodox and sound monetary policy that is centred on having an independent central bank; second sound fiscal policy; and third a highly complex series of actions known as the Government’s Business Growth Agenda which covers a multitude of issues from infrastructure through to investment in information and communications technology research and development and free-trade areas.So I am just trying to work out well if plan B is the complement or the opposite of plan A what would that look like? I mean what are proponents of this mysterious and unknowable plan B going to do about monetary policy? Would they not want what has just happened as a consequence of plan A which is that with a flexible exchange rate and the Governor of the Reserve Bank having been givena mandate by this Parliament the exchange rate has fallen by around 25 percent on the basis of the cross rate which has shielded our dairy farmers—and I am pleased to see some modest relief this morning for them in the Global Dairy Trade overnight from Boston. Would the proponents of plan B want to reverse this? And what about the effects on our other exporters who are actually having a very good ride at the moment? Would that be part of plan B—a different policy for the exchange rate?The same could be said about interest rates. As things have got a little more difficult internationally and zero interest rates are still pertaining around the world our own interest rates are at a very low point. Fortunately they are still positive which is a sign of strength. The countries in the greatest difficulty with their monetary policy are in fact countries with zero interest rates or even perhaps implied negative interest rates essentially. So I do not know what plan B would be but I think that plan A when it comes to monetary policy is serving New Zealand extremely well.Then let us go to fiscal policy. Fiscal policy—what we see around the developed world is debt. We have debt around the world that is averaging in the OECD at close to triple figures and in some cases is over 200 percent of GDP. Our net Crown debt to GDP is from memory around 32 or 33 percent and we are likely to be below 30 percent in a year or two as the Government led by Mr English our Minister of Finance has kept a heavy steady hand but not cutting slashing and burning as was claimed at the time. Continual discipline has managed to reduce our deficit which was caused of course by the conjunction of the global financial crisis and the Canterbury earthquake when we did deliberately seek to borrow in order to shield vulnerable New Zealanders—the very people whom the Opposition claims it speaks for—from the full effects of this. Then we started a process of fiscal consolidation to the point where we are pretty much even-stevens at the moment.So I do not know what plan B would be like but that is what plan A is. I do not think I would want to see that reversed.Then we look at the elements of—well people call it different things. Some people call it microeconomic reform. I think it is far broader than that but it includes microeconomic reform. It is kaizen: a continuous improvement system of trying to ensure that this economy responds to competitive opportunities and I will start with free-trade agreements. Free-trade agreements—let us just put one simple statistic out there on the table. In the last 7 years from 2008 New Zealand exports to non - free-trade agreement countries have declined on an average of 2.6 percent per year and have increased to free-trade agreement partners by slightly over 10 percent on average every year. I rest the case.