Bayly Andrew: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeBayly Andrew: Oral Questions — Questions to Ministers[Sitting date: 29 March 2016. Volume:712;Page:9919. Text is incorporated into the Bound Volume.]1.ANDREW BAYLY (National—Hunua) to the Minister of Finance: What recent reports has he received on the New Zealand economy?Hon BILL ENGLISH (Minister of Finance): On Friday the credit rating agency Moody’s confirmed that New Zealand continues to hold a AAA rating—the strongest rating given by that agency. It highlighted solid growth the 2014-15 surplus and relatively low Government debt as factors in its decision. Last week Standard and Poor’s another credit rating agency also released its analysis reaffirming New Zealand’s AA foreign currency rating and AA+ local currency rating. This confirms that the economic programme is on track.Andrew Bayly: What do these reports say about the outlook for economic growth in New Zealand?Hon BILL ENGLISH: Moody’s view is that the New Zealand economy is growing relatively strongly despite the steep fall in dairy prices and that growth is expected to remain relatively robust—that is at around 2.5 to 3 percent. Standard and Poor’s expects the economy to grow by an average of 2.7 percent over the next 4 years.Grant Robertson: Has he seen the report from the Prime Minister on 6 August last year saying that a new flag was “gonna be worth billions” to New Zealand; if so how has the outcome of the referendum been factored into this year’s Budget?Hon BILL ENGLISH: Yes and of course they would have been windfall gains so they do not have to have been factored in.Andrew Bayly: What risks are there to New Zealand’s economic growth?Hon BILL ENGLISH: One risk highlighted by Standard and Poor’s is New Zealand’s level of foreign debt. This is something that the Government has been focused on as well. We have made good progress. The current account deficit is currently 3.1 percent less than half of what it was back at the peak of the last cycle. Net external debt has fallen to 45 percent of GDP down from 83 percent back in 2008 and is now at its lowest level since 2003 which means that our stock of external debt as a proportion of our economy is falling and is likely to continue to fall.David Seymour: Has the Minister seen advice from Treasury to the Welfare Working Group suggesting that a guaranteed minimum income might reduce economic growth by as much as 2.8 percent per annum?Hon BILL ENGLISH: I will take the member at his word that that may have been its advice in 2012. But he can be reassured that there is no way that the universal benefit income will happen so we will not have to deal with those sorts of consequences.Andrew Bayly: What other risks are there to New Zealand’s strong international credit rating?Hon BILL ENGLISH: Standard and Poor’s highlighted New Zealand’s fiscal settings and Reserve Bank credibility as key factors in its decision to reaffirm its strong rating with a stable outlook. Significant riskscould of course occur if the Government got off track where for instance politicians started setting interest rates or we provided a universal basic income to all New Zealanders over the age of 18 regardless of whether they work. In the long run those would probably have a negative impact on our credit ratings.