Jones Shane: Questions for Oral Answer — Questions to Ministers Questions to MembersText is incorporated into the Bound VolumeJones Shane: Questions for Oral Answer — Questions to Ministers Questions to Members[Sitting date: 25 September 2013. Volume:693;Page:13690. Text is incorporated into the Bound Volume.]6.Hon SHANE JONES (Labour) to theMinister of Finance: Does he agree with the Productivity Commission that the “growing gap in labour productivity has been the main driver of an increasing disparity in GDP per capita between the two trans-Tasman economies” and given double-digit house price inflation in Auckland doesn’t this show the Government’s efforts to rebalance the economy towards productive exports and jobs has failed?Hon BILL ENGLISH (Minister of Finance): In answer to the second part of the question no. The commission’s full comment refers to New Zealand’s relative decline since the mid-1970s. The Government understands those issues and has a programme in place of tax reform upgrading educational achievement and skills training building more infrastructure rolling out ultra-fast broadband—perhaps some 10 years ahead of when it would have turned up in the market—and getting the Government back to surplus. We believe that this programme and hundreds of other initiatives will contribute to closing the productivity gap with Australia.Hon Shane Jones: Why does he believe the Government’s current economic settings are correct when the Productivity Commission says that New Zealand’s productivity performance shows no evidence of catching up to other countries?Hon BILL ENGLISH: We have looked at that evidence pretty hard and we believe that the programme the Government has outlined will make a difference. I must say that in trying to turn round productivity decline dating back to the 1970s it will take persistence over time with sensible policies and public support. That is the recipe that this Government is following. We welcome suggestions from the retread economic spokespersons on the Opposition front bench that will assist in that project.David Bennett: When did the New Zealand economy first show signs of imbalance in the current economic cycle?Hon BILL ENGLISH: Well between 2001 and 2007 house prices doubled. By 2007 first mortgage interest rates were at 10 percent. They are currently half of that. In the 5 years to 2008 public spending increased by 50 percent. The result of that was that in 2005 the export sector in New Zealand went into recession when the rest of the globe was enjoying an economic boom. It was a pretty amazing achievement.David Bennett: What is the outlook for the New Zealand economy and how does that compare to the situation in 2008?Hon BILL ENGLISH: The current economic outlook is for 2 to 3 percent growth over the next 3 years with export growth of 2 to 3 percent once the effects of the drought are over. The Government is expected to be in surplus in 2014-15. This compares favourably to the situation in 2006 to 2008 when the housing market was booming first mortgage interest rates were at 10 percent but the export sector had already been in recession for a couple of years. In the next 2 or 3 years New Zealand will be one of the fastest-growing developed economies and one of a handful in surplus but there is a lot of work to do yet particularly on productivity.Darien Fenton: Given that the Productivity Commission’s report shows that the long hours New Zealanders work have not helped improve wages or productivity will he support an amendment to the Employment Relations Act that would require employment agreements to have a clear indication of the hours that employees must work rather than the completely deregulated system we have now where some workers are working dangerously long hours?Hon BILL ENGLISH: No workers should be put in the position where the hours of work they have are dangerous. If that is the situation then their employers are breaching their statutory responsibilities. I know the member has for instance been supporting a campaign around the forestry industry which I think has had some impact on that industry that is positive for workers in reducing the dangers posed by long hours.David Bennett: What alternative economic proposals has he seen and what effect would those proposals have on productivity and the tradable sector?Hon BILL ENGLISH: I have seen a number of proposals over recent weeks which I think come from somewhere in the 1960s and 1970s around how to try to legislate for a stronger economy with higher taxes more spending and bigger Government. I have also seen a number of proposals to shut down the dairy industry close down the smelter prevent all mining and stop any new irrigation at the same time as people are proposing more jobs and regional development. It clearly does not make sense.Hon Shane Jones: Does he agree that the 2.5 percent decline in productivity recorded by Statistics New Zealand in the fishing and forestry industries since 2008—the first productivity decline in those crucial regional sectors since records began—is directly linked to his Government’s cuts to regional training; if not why not?Hon BILL ENGLISH: No I certainly do not agree with that although the reasons for that decline are not well understood. My colleague Minister Joyce and the Ministry of Business Innovation and Employment are doing a lot of sectoral work to understand changes in productivity. In respect of training schemes we are still cleaning up the mess left by the last Government of billions of dollars of wasted spending—misleading young New Zealanders that they were getting tradable skills when they were not. But the clean-up is almost over and help is on its way for those young New Zealanders who do want better skills.Hon Shane Jones: How will he achieve his promise to close the wage gap with Australia when the Productivity Commission says that under his current economic settings New Zealand’s productivity performance shows no evidence of catching up?Hon BILL ENGLISH: As I said before the Government has outlined its plan. It is all set out in detail in the Business Growth Agenda which has been thoroughly discussed with business with iwi with tertiary institutions and with industry groups. And if the member has another suggestion or two to add to the 300 policy initiatives they are most welcome.Rt Hon Winston Peters: Question No. 7.Mr SPEAKER: Supplementary question? Oh question No. 7. Very eager today.