Goldsmith Paul: Questions for Oral Answer — Questions to Ministers 
Text is incorporated into the Bound Volume 
Goldsmith Paul: Questions for Oral Answer — Questions to Ministers 
[Sitting date: 29 November 2012. Volume:686;Page:6939. Text is incorporated into the Bound Volume.] 
2. 
PAUL GOLDSMITH (National) 
 to the  
Minister of Finance 
: What reports has he received on the global economic situation and its expected impact on the New Zealand economy? 
Hon STEVEN JOYCE (Acting Minister of Finance) 
: 
 The Organization for Economic Cooperation and Development this week issued its updated forecast for the world economy. As the OECD Secretary-General said the world economy is far from being out of the woods. Accordingly the OECD has revised down its outlook for the world economy from its previous forecast in May. It now expects economic growth of only 1.4 percent across the OECD in 2013 which will match the expected growth for this year. This is forecast to rise to only 2.3 percent in 2014. The weaker position across developed economies is expected to moderate growth in this country with a forecast growth of 2.4 percent next year which would make us in a stronger position than many other countries we compare with. 
Paul Goldsmith 
: What are some of the factors behind the OECD’s weaker forecasts for global growth? 
Hon STEVEN JOYCE 
: There is a range of factors. If we look around the OECD according to the OECD’s latest forecasts the US economy will grow by 2 percent in 2013 with the Japanese economy expanding by only 0.7 percent while the euro area will remain in recession until early next year. The OECD has observed that if the US fiscal cliff materialises it could tip in fact an already weak US economy into recession. The OECD says that Governments in the euro area and the US must act decisively using all the tools at their disposal to turn confidence round and boost growth in jobs and that is exactly what the New Zealand Government is doing in this country. 
Paul Goldsmith 
: What observations does the OECD make about the New Zealand economy and its outlook for the next few years? 
Hon STEVEN JOYCE 
: The OECD observes that the New Zealand economy is likely to continue expanding at a moderate pace. It notes that there will be headwinds from weak external demand a resulting strong currency high household indebtedness and fiscal consolidation. However I have said that its forecast growth of 2.4 percent for New Zealand in 2013 and 2.9 percent in 2014 would leave us relatively well placed against other countries in the OECD. That relatively good position was confirmed today by Statistics New Zealand which showed average household incomes increased by 2.3 percent in the year to June 2012 while housing costs for example were unchanged in that year. So times remain challenging for many households but on average incomes are rising faster than the cost of living. 
Andrew Williams 
: What is his response to a report from the New Zealand Institute of Economic Research this week that warns that New Zealand exports to Australia our largest export market declined sharply by almost 10 percent in the last 6 months; and how does he expect this to impact on the New Zealand economy? 
Hon STEVEN JOYCE 
: My understanding is that is partly in the petroleum space so I would need to go back and have a look as to what is driving that particular figure. But I would say to the member that yes it remains a challenging time and of course we all watch with close interest what is happening with Australia because the eastern states of Australia particularly New South Wales and Victoria are showing signs of struggling and a lot of our goods do go into those markets whereas the states such as Western Australia and particularly central Queensland are where most of the Australian growth is occurring. So I think that underscores the challenging nature of the economy that we are in and the constant work we all have to do to improve the competitiveness of the environment that our businesses operate in. 
Paul Goldsmith 
: What can New Zealand learn from the experiences of other countries in light of the latest OECD forecasts? 
Hon STEVEN JOYCE 
: Well there are probably three main lessons. Firstly we must continue with the Government’s wide-ranging economic programme which is focused on responsible fiscal and economic management and also improving the competitiveness of our businesses through the Business Growth Agenda. Secondly New Zealand is better placed than most other countries in the OECD and now is not the time for risky and untried economic experiments. And the third lesson is probably that promises of more borrowing and more spending including say for example a very large housing programme that was uncosted or perhaps doubling paid parental leave should simply not be approached at this time given the fragility of the world economy.