[Sitting date: 23 May 2012. Volume:680;Page:2307. Text is incorporated into the Bound Volume.]
Hon DAVID PARKER (Labour) to the
Minister of Finance: Does he stand by his statement on page 1 of the Budget 2011 Executive Summary, where he states that
growth is “forecast to reach 4 percent next year and the economy forecast to create 170,000 new jobs over the next four years”?
Hon BILL ENGLISH (Minister of Finance)
: Yes. That was Treasury’s best professional judgment at the time, as it is required by statute to give to the Government of the day. Subsequent to those forecasts a number of things happened: New Zealand’s savings rate increased faster than expected, world growth was lower, and a major earthquake occurred in Canterbury on 23 December, delaying the recovery. However, the Government still aims to reach surplus a year earlier, as was stated at that time.
Hon David Parker: Is he standing by his promise in last year’s pre-election Budget that growth will be 4 percent in 2012-13—a promise that he made after the two major Canterbury earthquakes, and 3 years after the global financial crisis hit?
Hon BILL ENGLISH: I think the member misunderstands how the process works. The fact is that under the Public Finance Act, Treasury is required to give its best professional judgment in its forecasts. The forecasts are not made up by the politicians, nor do they amount to promises. They are forecasts of what is expected to happen at that time. This Government has shown that when circumstances change, it is able to adapt its policy, and right through the global recession and a slower recovery we have protected the most vulnerable, maintained public services, and worked on policy to build our longer-term economic prospects.
Hon David Parker: Well, if they are not promises, when he wrote on page 2 of the 2011 Budget “Achieving Higher and More Sustainable Growth” was he trying to be funny, and will tomorrow’s headline accurately reflect that his Government has, in fact, delivered the lowest growth of any Government in 50 years?
Hon BILL ENGLISH: The Budget tomorrow will include Treasury’s best professional judgment about the economic forecasts for what will happen over the next couple of years. The member can look at the OECD forecasts that were produced this morning and compare those with the forecasts that Treasury will put in as the basis for the Budget. But, as I think we have said before, on “Planet Labour” nothing else happened in the rest of the world in the last 3 or 4 years. In the real world there have been a few challenges.
Hon David Parker: Has he seen the National Bank’s regional GDP series, which shows that despite its terrible problems, the Canterbury economy has grown at a faster rate than the rest of the country since the February 2011 earthquake, and why then does he continue to use Canterbury as the excuse for not meeting his own growth forecasts?
Hon BILL ENGLISH: The Labour Party is getting to the position where it would use gravity as an excuse for why people cannot fly. The fact is, in Canterbury, the rebuild will mean much faster than average growth rates—not 2 or 3 percent but 7, 8, 9, or 10 percent growth rates, as the rebuild picks up. I know the members believe that the Prime Minister is all-powerful but, actually, if he could have stopped the earthquake on Christmas Eve—which that party trivialises—then I am sure he would have.
Hon David Parker: Does he stand by his statement on page 35 of the Budget that New Zealand’s growth rate is accelerating; and if so, was the growth rate he was referring to not GDP growth but the rate at which his management is driving New Zealanders to Australia?
Hon BILL ENGLISH: No; I was referring there to the rate of growth in GDP. The Government is pursuing policies that it believes will lift our long-term prospects. As the member knows, GDP growth rates are affected by a lot of shorter-term pressures, positive and negative, but we are focusing on the long term—on building infrastructure, lifting our skills capacity, increasing innovation to support businesses, and improving our regulations so that businesses will make active decisions to invest and employ. We
are not going to rely, as the previous Labour Government did, on excessive consumption and Government spending, funded by debt. That is not sustainable growth.
Hon David Parker: If it is all going so well, why are we having a near-zero Budget?
Hon BILL ENGLISH: Even in year 4 we are still winkling out of the system the waste and extravagance of the previous Labour Government. And that is why we can afford billions of dollars of new initiatives and fund them from savings.