Gilmore Aaron: Questions for Oral Answer — Questions to Ministers 
Gilmore Aaron: Questions for Oral Answer — Questions to Ministers 
[Volume:665;Page:12605] 
2. 
AARON GILMORE (National) 
 to the  
Minister of Finance 
: What is the main economic challenge facing New Zealand and how is this being addressed by the Government’s comprehensive economic programme? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 New Zealand’s main economic challenge is that our growth rate fell sharply from about 2005. The economy from about then became heavily reliant on unsustainable Government spending and excessive borrowing for housing speculation. So we went into recession before the global financial crisis. Our average per capita growth rate for the 3 years to 2008 was negative 0.5 percent per year. The Government has sought to address this challenge by means of a substantial tax reform programme a multibillion-dollar infrastructure programme sorting out the Government’s finances which were left in a mess improving skills and education and cutting red tape. 
Aaron Gilmore 
: What are the main symptoms of the significant imbalances that have been built up in the New Zealand economy over the past 5 or 6 years? 
Hon BILL ENGLISH 
: There are two main symptoms. One is that the tradables sector which is exporters tourism and import-competing industries—the earning side of the economy—went into recession in about 2004. There have been no net new jobs in agriculture and manufacturing since 2002. Since then however the non-tradables sector the spending part of Government and domestic industry has grown by about 10 percent. The second symptom is a sharp rise in New Zealand’s net external liabilities which have grown from about $100 billion in 2000 to about $170 billion this year. They are forecast to increase to $250 billion—or one-quarter of $1 trillion—by 2014. Both of these trends need to be turned round. 
Hon David Cunliffe 
: Given the cancellation of the much-touted programme to mine national parks and the failure so far to fund the roll-out of broadband can he confirm that the only comprehensive economic programme left for the Government is its policy to reduce or destroy labour rights? 
Hon BILL ENGLISH 
: No. Our programme needs to be comprehensive in order to turn round the mismanagement of the previous Labour Government which caused the significant imbalances that I just talked about. From 2002 there have been no new jobs in agriculture and manufacturing although on the other hand the Government sector and domestic housing spending and consumption spiralled out of control. 
Aaron Gilmore 
: What early signs of progress has he seen that some of New Zealand’s economic imbalances are being turned round? 
Hon BILL ENGLISH 
: First the economy is actually growing now instead of shrinking as it was in 2007 and 2008. The tradables sector has grown by 3.4 percent in the 9 months to March 2010—faster than the non-tradables sector. That would be the first time since December 2002 that our earning capacity has grown faster than our spending. Finally New Zealanders are being more careful with their spending. Per capita private sector consumption has grown by only 1 percent in the past year after consistently increasing at above 4 percent per year between 2002 and 2007. Household debt is also easing after a decade of rapid growth under the previous Government. 
Hon David Cunliffe 
: Is it not true that skills and technology are some of the primary drivers of productivity and that productivity is one of the key issues that is holding back New Zealand; if so why did the Government scrap the research and development tax credits cut the Skills Strategy cut education and cut the Fast Forward fund? 
Hon BILL ENGLISH 
: We ditched a whole lot of verbose meaningless strategies that the previous Labour Government spent millions of dollars on workshopping drafting redrafting and publishing because none of them had worked. The evidence for that is that under the previous Government growth virtually stopped our spending went out of control our earning capacity was throttled and New Zealand built up record amounts of debt. We are changing that. 
Aaron Gilmore 
: What economic policy prescription would put these early signs of recovery at risk and cost thousands of jobs? 
Hon BILL ENGLISH 
: Pretty much anything that the previous Labour Government did and anything that the current Opposition promises to do.