King Annette: Questions for Oral Answer — Questions to Ministers 
King Annette: Questions for Oral Answer — Questions to Ministers 
[Volume:667;Page:14491] 
2. 
Hon ANNETTE KING (Deputy Leader—Labour) 
 to the  
Minister of Finance 
: Does he agree with Alan Bollard who said that the economic recovery is proving “brittle uncertain and full of surprises”? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Yes generally I do. That is a description of recovery around the world but as I have pointed out in answers to previous questions the reason our recovery is not taking off is that New Zealanders are saving instead of spending. In the short term that means a slightly slower recovery; in the long term it is the right kind of adjustment and it means that we will get sustainable jobs and sustainable growth in incomes instead of some kind of sugar shock. 
Mr SPEAKER 
: Before I call the honourable member for her first supplementary question I encourage members not to start interjecting before the Minister has even opened his mouth. It is a little difficult when there is such a barrage of interjections before he has even uttered a word. 
Hon Annette King 
: Was he surprised to learn yesterday that grocery prices rose 2.6 percent and fruit and vegetable prices rose 6.8 percent in the last year just after he had claimed that food and vegetable prices had actually dropped by 6.5 percent in the last 2 years; and could that be why householders are not spending their money on frivolous things like flat-screen televisions? 
Hon BILL ENGLISH 
: The member was referring to figures that we have used in the House because Labour had overlooked its own track record. In respect of vegetable prices in the 2 years to September 2008—[ 
Interruption 
] They are so much better when Phil is away and David is in charge. In the 2 years to September 2008 vegetable prices went up 21 percent. In the 2 years from 2008 to 2010 they had dropped by 6 percent. 
Mr SPEAKER 
: I think the House has had its fun. A little decorum would be helpful. 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. Just briefly you have previously ruled that it is inappropriate for Ministers to spend most of their answers talking about Opposition policy and I would argue that we have had yet another reminder that they cannot drop the habit. 
Mr SPEAKER 
: The member has raised a valid point of order; Ministers should not spend most of their answer talking about Opposition policy although on this occasion the Minister was talking about past record which is a little different. I draw a distinction between referring to past record and some policies of another party. That should not be. 
Hon Annette King 
: Was it another surprise for the Minister when the president of Federated Farmers said that the Government can propose cycleways but they will not get us far and that the situation they now face is like rearranging the deckchairs on the Titanic? 
Hon BILL ENGLISH 
: No. I was not surprised at the president of Federated Farmers making those remarks. The Government is focusing on the competitiveness that our export sector will need and that is why we have a comprehensive programme of regulatory reform infrastructure investment investing in skills and changing the tax system as we did on 1 October to make sure that this country can earn before it spends. Over the next 10 years that is what we will have to do. Under that member’s Government the country consumed and borrowed and spent before it earned. 
David Bennett 
: What was the economy like when the Government came into office in late 2008? 
Hon BILL ENGLISH 
: Well what a good question! In short it was a mess. The economy went into recession at the start of 2008 when the rest of the world was still growing. In 2008 inflation was rampant at 5.1 percent and that was without a GST increase; it was purely the product of the efforts of the previous Labour Government. Real wages were dropping in 2008. It will take some years to undo the damage. 
Hon David Cunliffe 
: Which of the following is true: that under the previous Labour Government the economy went through the best of times and ran a $2 billion surplus or that under the previous Labour Government the economy was mismanaged as he now alleges; if so did that have anything to do with a world record low unemployment rate cutting net debt to zero and gross debt in half and running growth for the longest expansion since World War II? 
Hon BILL ENGLISH 
: I do not think any of those things are actually correct. But the member needs to ask why if he did such a fantastic job he lost the election so badly. 
Hon Annette King 
: Was it a surprise when he heard that the number of people receiving the unemployment benefit had increased again and is now at 65281 when he previously stated just a few days before that “there’s no doubt that unemployment has peaked”? 
Hon BILL ENGLISH 
: As the member knows the figure that is used in the forecast is the household labour force survey figure which is the same one that the previous Labour Government always used. But I remind the member that the number of people on the unemployment benefit was higher than it currently is in 2004 2003 2002 2001 and 2000. That is for over half of Labour’s term the number of people on the unemployment benefit was higher than it is now and I do not remember her kicking up a fuss then. 
Hon Annette King 
: Was he surprised to learn that despite his belief that many supermarkets would be putting up their prices by less than the GST increase the cost of items such as onions has risen by 81 percent pasta has risen by 22 percent toilet paper has risen by 41 percent apples have risen by 5.9 percent and potatoes have risen by 2.8 percent; and will he now apologise for not knowing the price of anything or the value of anything either? 
Hon BILL ENGLISH 
: The answer to that is no. In fact I know that it is very disappointing for the Opposition but all the recent forecasts of inflation and the cost of living are moderating not going up. Despite the fact that the Government has increased GST as part of a $4 billion income tax cut we will not see high and increasing inflation. 
Hon Annette King 
: Was he surprised to learn in light of that answer of the flurry of complaints to the Commerce Commission of excess pricing regarding the increase of GST by 2.5 percent being attributed to the increase of 2.5 percent in GST and was he surprised to learn that Meridian Energy chose to impose 15 percent GST on people in Christchurch in September which was the coldest month they had and which included a force 7.1 earthquake? 
Hon BILL ENGLISH 
: In respect of the issue regarding Meridian Energy I understand that some discussion is going on now that amounts to an argument over the interpretation of the transitional provisions. What the member can be reassured about is that the Government anticipated that the transition could be complex and made provision for businesses such as Meridian Energy to choose the lower GST option. 
Dr Russel Norman 
: Is New Zealand’s economic recovery vulnerable to oil price shocks; if so how? 
Hon BILL ENGLISH 
: Yes the New Zealand economic recovery is vulnerable to any kinds of price shocks including oil price shocks. At the moment there is evidence of increases in commodity prices that would suggest that there could be risks in the future. That is why we have to manage the Government’s books very tightly in case things go wrong. That is why we need to get on with a programme of structural reform investment in infrastructure and in skills and changes in the tax system. Those are some of the things we can influence that will improve our outlook. Other things like the oil prices we cannot influence but we could be badly affected by them. 
Dr Russel Norman 
: In reference to the infrastructure investment does he think that future high oil prices should be considered in the business cases for new infrastructure such as roads of national significance? 
Hon BILL ENGLISH 
: That factor is taken into account indirectly through traffic forecasts and it is possible that if oil prices got very high and stayed that way there would be less traffic. I do not think that is likely. The record in New Zealand is that with economic growth traffic volumes tend to grow. But fundamentally we leave those decisions to New Zealanders to decide whether they want to face that cost and have the related benefits or get on their bikes or take public transport. 
Dr Russel Norman 
: Does he believe that the kinds of infrastructure investments that the Government makes have a profound effect on behaviour by providing opportunities to use public transport or opportunities to use motorways so given the length of time that these infrastructure investments last for he needs to take into account the future price of oil because these infrastructure investments will last for many decades? 
Hon BILL ENGLISH 
: The Government in the first place is not any better placed than anyone else to guess prices in 10 or 20 years’ time; but secondly we have spread our investment on infrastructure. For instance in the Auckland area we are spending about $3.5 billion on motorways but $1.5 billion on trains. I hope that in 20 years’ time both of those investments have proven to be useful and it will need a sharp increase in the patronage of people using public transport to make those investments viable. At the moment they are pretty marginal. 
Dr Russel Norman 
: Is the Minister aware of the comments made by the chief economist from the International Energy Agency just last year in which he said “oil … is running out far faster than previously predicted and that global production is likely to peak in about 10 years—at least a decade earlier than most governments had estimated.” and if global oil production peaks in 10 years does he think that will result in an increase in the price of oil? 
Hon BILL ENGLISH 
: I think that is anticipated to a significant extent because we are seeing any number of energy companies looking at investing in alternative sorts of energy. We are seeing significant investment in solar energy for instance which is bringing the price down and investment in electric cars on a pretty large scale. I think most people expect oil prices will be pretty high and they are looking for alternatives. In our view that is best left to the market which has stronger incentives to get it right than Governments trying to follow political fashions. 
Dr Russel Norman 
: Does he believe that it is possible if oil peaks within 10 years for the entire New Zealand transport fleet to turn over to electric cars? 
Hon BILL ENGLISH 
: No I do not think it is possible that the whole fleet will but Cabinet has made a start with Minister Nick Smith’s electric car parked at Nelson Airport. I am sure others will follow his example. These things never happen in one big swing; they will happen over time. But I do not think there is any doubt that electric cars will become more common and that will be a good thing if the economics of it are right.