Groser Tim: Estimates Debate — In Committee 
Groser Tim: Estimates Debate — In Committee 
[Volume:648;Page:17466] 
TIM GROSER (National) 
: 
 If I am not mistaken this is the last scheduled confidence motion of this Parliament and we are discussing Vote Finance which is the very heart of any Government’s programme. 
It occurs to me that members of the public listening to this debate may have also listened to the first half of question time today when some very serious questions were raised by our leader John Key about the integrity of a Minister—we were not seeking to answer those questions but to raise them with the Prime Minister. We received purely procedural answers designed to deflect those questions and I wonder whether the Government realises that a rather more serious confidence motion will be before it shortly. No doubt it will cobble together sufficient votes to pass this bill but ultimately I think that the words of the Prime Minister herself apply here. She said that the fate of this Government will be decided in the court of public opinion and it is perfectly clear to us that the mood of this country is that it is ready for change. 
When we look at the overall economic record of this Government within the context of this bill we see a complete shift in the underlying circumstances of our country. In 2000 the Government was like a kid taking over a candy shop. We had had stellar labour productivity growth averaging 3.2 percent in each of the previous 3 years. We had a GDP growth rate of 4.1 percent at an average of 3.5 percent per year from 1992 through to 2000. Inflation was at around 2 percent. Unemployment had been falling rapidly from 1991 and was clearly scheduled to fall further. We had the best terms of trade that any Government had enjoyed for 25 years. We had the base laid for massive growing surpluses which could have been used when the times were good to re-incentivise the New Zealand middle class. Broadly speaking that was the inheritance that Labour took into office in its first years. 
Hon David Carter 
: Where did it go wrong? 
TIM GROSER 
: Where those members went wrong to put it bluntly was on every single one of those fronts. Let us just go through the record. We now have inflation above 4 percent and probably heading for 5 percent. The great cushion of the last few years which was assistance on the inflationary front from the tradable sector has disappeared and because nothing has been done to address the problems in the non-tradable sector we now have a major problem on top of an older existing problem. We have an economy that is technically no doubt in recession. In spite of the last small reduction in the official cash rate by the Governor of the Reserve Bank in response to a much much more difficult economic outlook we still have among the highest interest rates in the developed world. Productivity has tanked. The general picture is one of a very very different economic framework from the one this Government inherited 9 years ago. In case people think that these are merely abstract economic statistics I beg to differ. I think that the political rubber has absolutely hit the middle of the road down main street New Zealand and New Zealanders are feeling this in their daily lives. They are feeling the impact of this as they go about their daily business. 
I am particularly concerned about the rise of inflation given the old cliché that inflation like pregnancy is a little hard to contain and I would like to ask whether the musings of the Minister’s colleague Mr Mallard when he indicated—and I will reconstruct his remarks as I do not have the exact quotation here—that the central planning framework had worked OK for a decade but now does not look so hot is something that we should simply disregard as Mr Mallard playing the bad cop or does it actually indicate that the Government is thinking about giving up? Does it indicate that we are looking at more fundamental changes that will simply lock in inflationary expectations at this much higher level with all the consequences that we learnt about for so many years in the 1980s as we adjusted out of double-digit inflation? Is that the way of the future?