Parker David: Questions for Oral Answer — Questions to Ministers 
Text is incorporated into the Bound Volume 
Parker David: Questions for Oral Answer — Questions to Ministers 
[Sitting date: 21 June 2012. Volume:681;Page:3215. Text is incorporated into the Bound Volume.] 
1. 
Hon DAVID PARKER (Labour) 
 to the  
Minister of Finance 
: Does he accept the BNZ statement that New Zealand’s increasing current account deficit is “a very clear risk for New Zealand’s credit rating with Standard and Poor’s”? 
Hon STEVEN JOYCE (Associate Minister of Finance) 
 on behalf of the Minister of Finance: The current account is a factor—obviously one factor—in credit ratings. If it was to climb to the levels of deficit last seen in say 2008 when it reached 8.8 percent that could be a risk depending on what else was happening in the economy. I would note however that both Treasury and Reserve Bank forecasts for the current account deficit have it tracking significantly lower than the BNZ does. At its current level of 4.8 percent the current account deficit is well below the level seen at its peak but it does remain of course a significant area to work on. That is why this Government has a comprehensive programme to get back into surplus make our economy more competitive lift savings and turn round the strong imbalances that have persisted over several decades. 
Hon David Parker 
: Did today’s GDP figures show that imports are up and exports are down? 
Hon STEVEN JOYCE 
: I do not think that today’s GDP figures interpreted either of those necessarily on their own. What they did show was that the growth in the March quarter was very broad-based including the manufacturing agricultural and services sector and was therefore very positive for the wider New Zealand economy. 
Hon David Parker 
: Do the forecasts from Treasury the Reserve Bank the IMF ANZ and BNZ all forecast the current account deficit getting worse because the cost of imports is rising faster than the value of our exports? 
Hon STEVEN JOYCE 
: I can confirm the first part of that question which is that they do forecast an increase in the balance of payments deficit over the next couple of years for a number of reasons one of the most significant ones being the imports required for the rebuild in Christchurch. But there are also other indicators as well. It is important to note also though that the Treasury numbers peak at well below what we saw in the last decade where they were getting to quite worrying levels of around 8 to 9 percent particularly in the last couple of years of the previous Government. 
Hon David Parker 
: Has he seen the BNZ report that our current account deficit rising as it is risks another credit downgrade; and how does he reconcile the risk of a credit downgrade with his comments about underlying strength in the economy? 
Hon STEVEN JOYCE 
: I think all forecasters are having their challenges at the moment including the bank in terms of its expectations for GDP growth. Of course it turned out to be quite different today just a day later. But I would also in terms of referring to the report which I have read point out that it does say very clearly that the Government must remain hell-bent on achieving surpluses so that the ratings agencies do not have the excuse of twin deficits to downgrade our sovereign debt. I can assure the member that the Government remains very focused on that I have to say in contrast to the Opposition. 
Rt Hon Winston Peters 
: Has the Minister seen the comments of Stephen Toplis Bank of New Zealand’s head of research on the current account deficit when he said: “Not only is this a direct threat to the NZD but it is also a very clear risk for NZ’s credit rating with Standard & Poor’s in particular having recently placed great emphasis on the current account’s progress.”; and given that and other comments why would a Minister of Finance wish to remain in office and should he not have been sacked a long time ago? 
Hon STEVEN JOYCE 
: I repeat the answers to earlier questions in the same vein. Yes it has widened but nothing like what it was under the previous Government before it left office where it went to 8.8 percent. 
Hon Member 
: Sticking to a plan that’s working. 
Hon STEVEN JOYCE 
: Well I think it is working a heck of a lot better than the previous Government’s plan—of that we can be quite sure.