Foster-Bell Paul: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeFoster-Bell Paul: Questions for Oral Answer — Questions to Ministers[Sitting date: 18 June 2014. Volume:699;Page:18609. Text is incorporated into the Bound Volume.]2.PAUL FOSTER-BELL (National)to the Minister of Finance: What reports has he received on progress New Zealand is making in improving its external trade and investment position with the rest of the world?Hon BILL ENGLISH (Minister of Finance):Statistics New Zealand this morning issued data showing that New Zealand posted a balance of payments surplus of $1.4 billion in the 3 months to 31 March. This is the largest quarterly surplus on record before seasonal adjustments. It helped to reduce the annual balance of payments deficit to 2.8 percent of GDP the smallest annual deficit since 2010 and it is another indicator of progress since the Opposition parties decided there was a balance of payments crisis. Looking ahead the deficit is likely to increase somewhat as capital investments pick up further and export prices come off their historic highs. We are working hard though to prevent a reversion to the deficit that was as large as it was between 2006 and 2008 under the previous Government.Paul Foster-Bell: How do the latest balance of payments and net international investment position statistics compare with the situation this Government inherited nearly 6 years ago?Hon BILL ENGLISH: Both of these indicators have improved in the last 5 or 6 years. In late 2008 the balance of payments deficit was around 7 percent of GDP having peaked at 7.9 percent in 2006. Today it has narrowed to 2.8 percent of GDP—acknowledging though that it is likely to deteriorate over the next couple of years. Our net international investment position has improved significantly. In 2009 New Zealand’s liabilities to the rest of the world were equal to 85.9 percent of GDP. The latest figures are that this has improved substantially to 65.3 percent of GDP. That is still high by international standards but it is the lowest level of liability since 2001.Paul Foster-Bell: What were the main factors driving the improvement in New Zealand’s balance of payments and net international investment position in March?Hon BILL ENGLISH: There were a number of contributing factors. There were goods exports across a range of commodities with meat making the most significant contribution. Exports of services were also increased as overseas visitors to New Zealand spent more while they were here. Unfortunately Statistics New Zealand was not able to count secret donations from Mr Donghua Liu to the Labour Party—Mr SPEAKER: Order!Hon David Parker: Is he concerned about the conclusion of the chief economist at the New Zealand Institute of Economic Research Shamubeel Eaqub who says that the big gaps opening up in New Zealand are across geographical race and education lines and he thinks that this is one of the biggest challenges for New Zealand?Hon BILL ENGLISH: No I am not concerned about his conclusions. Mr Eaqub may have recently discovered that there are educational differentials within New Zealand. This Government has been working very assertively to close up those differences over the last 5 years. It is now starting to make some significant progress—where for instance it is now much more likely that Māori and Pasifika students will reach national standards and that they will pass NCEA level 2.Paul Foster-Bell: What approaches to economic policy would put at risk the good progress being made with the balance of payments and net international investment positions?Hon BILL ENGLISH: There are really two things that the Government is seeking to manage. One is that a rapid rise in Government spending has occurred up to 2008 and the Government is managing that by curbing its own spending over the next few years. The second is to work with councils to manage our fast-rising housing market because continued inflation in the housing market will tend to force interest rates higher than they should be.