Bakshi Kanwaljit Singh: Questions for Oral Answer — Questions to MinistersText is subject to correctionBakshi Kanwaljit Singh: Questions for Oral Answer — Questions to Ministers[Sitting date: 04 December 2013. Volume:695;Page:15200. Text is subject to correction.]2.KANWALJIT SINGH BAKSHI (National) to theMinister of Finance: What reports has he received on progress in lifting New Zealand’s export performance and reducing its reliance on borrowing from overseas lenders?Hon BILL ENGLISH (Minister of Finance): I have received a number of reports confirming strong performance by New Zealand’s exporters particularly in those areas where the Opposition was most concerned—that is in the regions and in manufacturing. Exporters have performed well despite strong headwinds from a high Kiwi dollar and difficult export conditions in our traditional markets. Our terms of trade rose 7.5 percent in the September quarter due to export prices rising faster than import prices. This is the highest terms of trade level since 1973 as determined by prices for our exports in world markets. The trade deficit for October was $168 million the lowest for any October month since the mid-1990s. So prices in world markets are higher than we expected but our exporters are performing better than was expected.Kanwaljit Singh Bakshi: What progress is the Government making in reducing New Zealand’s external vulnerabilities particularly in bringing down the longstanding current account deficit?Hon BILL ENGLISH: First of all the Government cannot have a direct effect on the current account deficit. What we can do is try to create conditions where our exporters thrive and where imported inflation is relatively low. Last week Statistics New Zealand issued the national accounts for the March 2013 year. They included significant upwards revisions to the estimates of spending by overseas visitors. This has had the effect of boosting our service exports and decreasing the amount that was originally attributed to the private consumption of households. As a result our recorded level of household and national saving has increased whereas the current account deficit for the year to March 2013 has decreased. It was estimated previously at 4.5 percent of GDP and it has now been re-estimated at 3.9 percent of GDP. So the statisticians have discovered that we are doing more exporting and less consuming than they thought.Kanwaljit Singh Bakshi: What steps has the Government taken to help to rebalance the economy towards more savings and exports and to veer away from excessive consumption borrowing and Government spending which marked the mid-2000s?Hon BILL ENGLISH: There is certainly more to do to rebalance this economy. It has been difficult to have the amount of export growth we would like to see when the exchange rate has been so high. And it has been a wee bit difficult to reduce Government spending when we have had the earthquakes in Christchurch requiring usto commit up to $15 billion to rebuild Christchurch. But despite those headwinds we implemented a tax package in 2010 that favoured savings and exports over consumption and property speculation. The Business Growth Agenda supports businesses to invest and employ and as a result the tradable sector which was in recession for several years up to 2008 has grown by 11.6 percent from its trough in the second quarter of 2009. But there is still much more work to do.Kanwaljit Singh Bakshi: What economic approaches would halt the progress being made in supporting exports productivity investment and jobs?Hon BILL ENGLISH: We have a reasonably good idea what would have a negative effect on New Zealand’s now positive growth prospects and those are the things that affected our growth prospects badly in the mid-2000s. Three factors were pretty clear from that: an excessive rise in house prices which doubled in about 10 years; runaway Government spending particularly from 2005 onwards; and regulatory change that inhibited business and export investment and savings. They were the policies of the Labour Party. We want to avoid those traps this time around.