4. Question No. 4—Economic DevelopmentHon TODD McCLAY (National—Rotorua) to the Minister for Economic DevelopmentQuestion No. 4—Economic Development 4. Hon TODD McCLAY (National—Rotorua) to the Minister for Economic Development: Does he consider manufacturing to be crucial to boosting jobs and growing our exports; if so is he concerned that under this Government the manufacturing sector fell into contraction for the first time since 2012?Hon PHIL TWYFORD (Minister for Economic Development): Yes this Government is focused on supporting New Zealand manufacturers. The latest Performance of Manufacturing Index was a mixed bag with some components expanding as the manufacturing sector continued to produce more and some components contracting. The Government is concerned that international headwinds and labour market capacity constraints continue to have an impact on manufacturing. Given that manufacturing accounts for more than half our total exports the change in the index for new orders shows the effect that international uncertainty is having. This is similar to what we're seeing in the UK the eurozone China and Japan. Similarly manufacturers are being held back by skills shortages with a reduction of 2000 people a year enrolling in manufacturing and related training programmes since 2009. That's why Minister Chris Hipkins is reforming vocational education. Hon Todd McClay: How does he explain export prices being at record levels whilst business confidence is falling and manufacturing is in contraction; and isn't it actually his Government's policies that are responsible not international markets or headwinds?Hon PHIL TWYFORD: Well it's true that by international standards our manufacturing sector is particularly trade-exposed because manufacturing accounts for half of our exports. The global uncertainty that you can see with Singapore India Indonesia and South Korea—all seeing significant falls in exports. China's economy grew at its slowest pace in almost three decades in the second quarter as the trade war with the US took its toll. That uncertainty is without question flowing through into investment decisions being made by New Zealand manufacturers.Hon Todd McClay: Which of his Government's policies does he believe are most responsible for the first contraction in manufacturing in 81 months? Hon PHIL TWYFORD: Only those policies that we inherited from the former Government that we haven't yet had the time to change or upgrade. Hon Todd McClay: Who does he agree with: the Deputy Prime Minister who said the problems in the manufacturing sector are contrived doom and gloom or New Zealand manufacturers who believe that the Government's economic policies are responsible for this contraction? Hon PHIL TWYFORD: Well the Government is concerned by the headwinds that are being experienced by New Zealand manufacturers. We are moving as fast as we can to reorient the economy away from a heavy reliance on population growth and housing speculation. We can't turn that situation around in 18 months but we are laying a very strong platform for New Zealand manufacturers for growth. We've got industry transformation plans under way including food and beverage manufacturing and wood processing as two of the first four of those industry transformation plans. We've got a massive project under way to reform vocational and industry skills. There's a specific skills shift project that we've negotiated and worked out with the manufacturing industry. R & D tax credits Reserve Bank reform—this is a very busy Government. Hon Todd McClay: Does he agree with Martin Simpson of Fraser Engineering who said: I have absolutely no doubt that the costs imposed upon all businesses throughout the country are going through the roof" and if so which Government policy is most to blame for this increased cost on manufacturers? Fletcher Tabuteau: It'd be health and safety. Hon PHIL TWYFORD: Well it's not so much the cost of the Government policy but actually as so many commentators and so much data shows—Hon Simon Bridges: I raise a point of order Mr Speaker. You've by my count taken five questions off our supplementary questions for interjecting during question time. I appreciate that's your rules and that's life. Mr Tabuteau just yelled across the Chamber and he should have the same treatment. SPEAKER: But I think the difference was he yelled while the answer was being made. There is a difference. Now I'm going to ask Mr Tabuteau: did he interject while a question was being asked? Fletcher Tabuteau: I waited for the speaker to answer. SPEAKER: I take the member's word and I will remind the Leader of the Opposition that they have gained as well as lost questions today. Back to the start of the reply.Hon PHIL TWYFORD: Thank you Mr Speaker. Actually the biggest cost that manufacturers report to us—and it's supported by the data—is actually skills shortages based on the skills shortages that we inherited after nine years of a failure to invest in the manufacturing workforce. The former Government left us with a situation where quarterly employment in manufacturing was falling in the year prior to our Government taking office. We are determined to turn that around but it will take a little bit of time."