Barry Maggie: Questions for Oral Answer — Questions to Ministers Questions to Members 
Text is incorporated into the Bound Volume 
Barry Maggie: Questions for Oral Answer — Questions to Ministers Questions to Members 
[Sitting date: 19 February 2013. Volume:687;Page:7922. Text is incorporated into the Bound Volume.] 
2. 
MAGGIE BARRY (National—North Shore) 
 to the  
Minister of Finance 
: What reports has he received on the New Zealand economy? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 The BNZ - BusinessNZ Performance of Manufacturing Index or PMI for January 2013 reported a value of 55.2. Values above 50 indicate increasing manufacturing activity. This is the highest reading since May 2012 and is starting to show a trend of increasing manufacturing activity. The report also noted that the Australian equivalent index is at 40.2 indicating a sharp contraction. That is the largest gap between the New Zealand and Australian economies in manufacturing in 11 years and in fact the biggest problem for New Zealand manufacturing this year is likely to be the sluggish Australian economy. 
Maggie Barry 
: What effect is the New Zealand dollar having on manufacturers exporters and households? 
Hon BILL ENGLISH 
: There is no doubt that both the exchange rate and the related state of overseas markets which is reflected in lower relative exchange rates for them have been a headwind for exporters. However over half of New Zealand’s more sophisticated manufacturing exports go to Australia where the exchange rate has been favourable and in fact remains below the average of recent years. Of course on the other hand the greater purchasing power of our dollar has lowered the cost of manufacturing imports in particular imported fuel and plant and machinery. I would note that manufacturing export volumes are not in fact in crisis; they are up 4 percent over the last year. 
Maggie Barry 
: In view of the recent highs of the New Zealand exchange rate what steps is the Government taking to help the economy become more competitive? 
Hon BILL ENGLISH 
: Over recent years we have taken many steps to improve the competitiveness of the economy and all of them were opposed by the Opposition parties. Just to list some of them there was the 90-day trial period for new employees removal of 170 unnecessary and excessive regulations reduction in tax on every manufacturing business and on every worker in those businesses in New Zealand and substantial investment in infrastructure to help make manufacturers more competitive. 
Maggie Barry 
: What alternative measures has the Minister of Finance seen for managing the exchange rate and what would be the effects of such measures? 
Hon BILL ENGLISH 
: I would not be able to outline the effects of any measures because I have not seen any sensible or feasible alternative measures proposed. What I can say though is that there have been some proposals to change the way the Reserve Bank target is expressed and I just want to read to the House what is in the policy targets agreement. 
Hon Annette King 
: This is just a political statement that’s nothing to do with their policy. 
Hon BILL ENGLISH 
: The member should listen because she might learn something: “In pursuit of its … stability objective the Bank shall implement monetary policy in a sustainable consistent and transparent manner”—and listen to this—“have regard to the efficiency and soundness of the financial system and seek to avoid unnecessary instability in output interest rates and the exchange rate.” Section 4(b) was written by Dr Michael Cullen of the last Labour Government and it was regarded as satisfactory wide-ranging and new thinking at the time and we have stuck to it. 
Hon David Parker 
: Has he seen the report of the IMF forecasting that New Zealand will have the worst current account deficit in the developed world this year worse even than in Greece; if so is he ready to admit that after 4 years he has failed in his goal of rebalancing the economy toward exports and jobs? 
Hon BILL ENGLISH 
: No I have not seen that report. Any report on the current account deficit should take account of its recent history which is that in 2006 2007 and 2008 it was at a record level in 30 years at minus 8 percent and today it is half what it was under the last 3 years of the last Labour Government. As I have pointed out manufacturing activity and exports are increasing not decreasing.