Barry Maggie: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeBarry Maggie: Questions for Oral Answer — Questions to Ministers[Sitting date: 27 August 2013. Volume:693;Page:13100. Text is incorporated into the Bound Volume.]1.MAGGIE BARRY (National—North Shore) to theMinister of Finance: What recent reports has he received on the New Zealand economy?Hon BILL ENGLISH (Minister of Finance): Earlier this week ratings agency Standard and Poor’s reaffirmed its AA foreign currency long-term rating for New Zealand. Its outlook remains stable. It said that New Zealand’s credit rating reflects the country’s fiscal and monetary policy flexibility economic resilience public policy stability and a stable financial sector. As it has noted before Standard and Poor’s also commented on New Zealand’s high external debt which is driven by high household and agricultural sector debt. Even so it has forecast current account deficit of around 6 percent by 2015—which I think is too pessimistic—which is significantly better than the 8 or 9 percent peak of current account deficits in the 3 years to 2008.Maggie Barry: What did Standard and Poor’s say about New Zealand’s immediate economic prospects and what are the main sources of expected economic growth?Hon BILL ENGLISH: Standard and Poor’s said that New Zealand does have the benefit of a resilient and relatively high-income economy and expects GDP to grow at about 1.5 percent per annum per capita over the next few years consistent with total GDP growth of 2 to 3 percent as we have spoken about for a number of months now. Growth is expected to be driven by post-earthquake construction in Christchurch as well as strong underlying demand for more residential construction in Auckland. The ratings agency notes that the Government’s checks and balances are effective and that we are near the top of many surveys on governance government efficiency and business promotion. However it is clear from its commentary that our external debt position is still too large and the more that we can encourage and support businesses to invest and households to reduce their debt the better for our long-term economic prospects.Maggie Barry: What other reports has the Minister received on the economy?Hon BILL ENGLISH: The New Zealand Institute of Economic Research has this week issued its quarterly predictions which note that the New Zealand economy is recovering moderately. It notes that there are significant global risks with signs of a slowing economy and financial instability in China and slower growth in Australia and some emerging markets. It notes that optimism is spreading across businesses and consumers. However this is no recipe for complacency. Clearly with our still relatively high debt levels and the need to grow our export sector there are many challenges ahead in lifting incomes and providing more jobs.Hon David Parker: Does he agree with the New Zealand Institute of Economic Research report that he just quoted that on page 4 says of Auckland: “growth in jobs has stalled and the region is on a ‘sugar high’ of rapidly rising house prices and debt”?Hon BILL ENGLISH: Yes to some extent. The Auckland housing market as I think is well understood has been growing faster than makes sense for a stable economy. Construction and housing there will promote growth and I would hope that the Opposition will be able to support the Government’s measures to ensure more houses on the ground more quickly in order to moderate that growth and moderate the sugar shock in the Auckland economy.Maggie Barry: What reports has the Minister received on alternative approaches to managing the economy particularly the management of the Government’s balance sheet to control debt?Hon BILL ENGLISH: One measure that the Government has taken to control debt is the partial sale of some Government assets which allows us to get cash from mainly New Zealand investors to invest in other priority public assets. I notice there is some opposition to this policy but I have not seen any reports that the opponents of the Government share offer programme will actually buy back the shareholdings in the Government electricity companies. I take it from that that the candidates for the Labour leadership do not actually believe the positions they are taking because they will not commit to buying them back.Mr SPEAKER: Order! That is a satisfactory long enough answer.