Peters Winston: Questions for Oral Answer — Questions to Ministers 
Peters Winston: Questions for Oral Answer — Questions to Ministers 
[Volume:625;Page:20037] 
1. Rt Hon WINSTON PETERS (Leader—NZ First) 
 to the  
Prime Minister 
: Why did she say in the House on 30 March 2005 in response to my questions about New Zealand’s growing net debtor position rising current account deficit and the continuing sales of New Zealand assets to foreign buyers “It is the same economy with the same current account deficit as was recorded when that member was the Treasurer in September 1997.” and “I do note that the highest-ever number of net land sales by hectare occurred when Mr Peters was in charge of the overseas investment legislation.”? 
Hon Dr MICHAEL CULLEN (Deputy Prime Minister) 
 on behalf of the 
 Prime Minister 
: Because that is what the figures show. 
Rt Hon Winston Peters 
: How can the figures possibly show that when the deficit when I was Treasurer was just over $6 billion and there has been a 57 percent increase under the Prime Minister’s administration to $9.4 billion and when will she and her Minister of Finance stop coming up with random figures that they have decided to pluck from the air? 
Hon Dr MICHAEL CULLEN 
: I am sure that the member who was Treasurer would know that he should relate the current account deficit to the GDP. While he was—[ 
Interruption 
] It is a bit cute to do anything different! The current account deficit peaked at 6.9 percent while that member was the Treasurer. 
Gordon Copeland 
: Does the sale of New Zealand assets to foreign buyers have a positive or a negative effect on New Zealand’s net position and its current account deficit? 
Hon Dr MICHAEL CULLEN 
: In general terms it should have a positive effect given that it meets a net national interest test in terms of land and a business test in terms of physicals. Of course in some instances one could argue that that has not necessarily always been true in specific cases but that is often being wise after the event rather than before. 
Rt Hon Winston Peters 
: What was the current account deficit in 1998 during the Asian economy crisis and is it not a fact that the sale of 199131 hectares—which allegedly took place according to the Prime Minister’s words under my stewardship—was purely a result of a US company by the name of International Paper exercising its pre-approved rights to increase its shareholding in Carter Holt Harvey a sale that was made possible only by and occurred during the ruthless and relentless policies of the 1984-1990 Labour Government? 
Hon Dr MICHAEL CULLEN 
: I note that the member is now shifting his ground. Yesterday he claimed that the bulk was accounted for by the Forestry Corporation sales which are not the same thing. In fact the Forestry Corporation assets that were dealt with in September 1996 and that were referred to yesterday—in terms of land as opposed to area of forest—comprised only some 2674 hectares. The Carter Holt Harvey acquisition he refers to was a deal agreed to in 1991. In terms of extending the shares it required approval for the extension of the time limit which had long since run out. That member gave approval for the extension of that in December 1997. He did not have to do so. 
Rod Donald 
: Does the Prime Minister agree with the recent comments of the Governor of the Reserve Bank that “We have had higher current account deficits than that before.”—this is referring to the most recent one—“Nevertheless I think it’s an undesirable feature and it’s probably the one area of our economy that you would say is not in a broad balance at the minute.” and what steps will the Government take to get the deficit into a better balance particularly in the light of the Reserve Bank’s view that the risk premium on the high current account deficit is costing borrowers—whether it is homeowners or businesses—a risk premium of 1 to 2 percent? 
Hon Dr MICHAEL CULLEN 
: I think we have to distinguish between two elements. The first is the long run current account deficit which in New Zealand has been higher than in many other countries. I think that we have never run a surplus on the current account and certainly not for anything more than a very short period of time. That is clearly a reflection over the long term of the fact that we have been a capital-acquiring country as an expanding country but also of a relatively low savings rate—even some years ago when our savings rate was higher than it is now. The second element is the cyclical element. Whenever we have the economy moving strongly we tend to accumulate a current account deficit because increased incomes lead to higher imports the dollar tends to rise which tends to reduce export income in New Zealand terms. That tends to be self-correcting. The concern at the moment is that because of the weakness of the US dollar that phase may last longer than is normal. 
Rt Hon Winston Peters 
: Why will the Prime Minister not answer the question as to what the current account deficit was in 1998 despite the Asian crisis and does she not understand what a pre-approved right is which was exercised by International Paper a long time before I ever became Treasurer as she and her Minister of Finance well know. 
Hon Dr MICHAEL CULLEN 
: In answer to the last point the pre-approved right in 1991 had long since expired by 1997. It had to be renewed on a number of occasions. The member did not have to approve that extension. [ 
Interruption 
] There was a time limit on the exercise of the pre-approved right. It had long since expired by 1997. On the other matter yes the current account deficit was beginning to improve. It usually does when the economy slows down as it did under that member as Treasurer.