6. Hon JOHN BOSCAWEN (Leader—ACT) to the Minister of Finance: Has the gap between GDP per capita in Australia and GDP per capita in New Zealand narrowed or widened since his Government came to office?

Hon STEVEN JOYCE (Associate Minister of Finance) on behalf of the Minister of Finance: Since the September 2008 quarter real GDP per capita in New Zealand has fallen by 2.9 percent, while real GDP per capita in Australia has fallen by 0.3 percent. This reflects the fact that we inherited a recession from the previous Government, which Australia did not have, combined with Australia’s unprecedented minerals boom. However, these figures move around from year to year, and quarter to quarter, and will continue to do so. For example, in the first quarter of this year the New Zealand economy looks like it has grown a little, while the Australian economy has shrunk by 1.2 percent. In the long term we believe that sound policies and careful and considered decision-making will mean that we will close this gap with Australia over time, and the resilience the economy has shown in recent times is a positive indicator towards that.

Hon John Boscawen: Given that he has just acknowledged that the gap between New Zealand and Australia has widened in the last 2½ years of his administration, is it still a concrete goal of the Government to close the income gap with Australia by 2025; if not, why not?

Hon STEVEN JOYCE: It is still the goal of this Government. I point out to the member that, as he may well be aware, the 2025 Taskforce, which was set up to consider how to close this gap, noted that “Year to year fluctuations in the income gap will occur, but may or may not reflect the relative merits of the policy frameworks in the two countries. For this reason, changes in the income gap are most accurately assessed over the medium term.” As I say, I refer that member to the 2025 Taskforce.

Hon David Cunliffe: If it remains the Government’s goal to close the gap with Australia, how long does he think it will take to do that, and when will he give the public targets and milestones, given that New Zealand’s GDP has fallen 3 percent since his Government came to power, the wage gap has widened from 30 to 35 percent of GDP since 2008, and a record number of New Zealanders are now voting with their feet and contributing to Australia’s economy, not ours?

Hon STEVEN JOYCE: The member is wrong on a number of counts, as my colleague Mr Power referred to in relation to the numbers in the previous question. Also, the member persists in using before-tax incomes for the comparator with Australia, which is, again, misleading. I am surprised, actually, that the member wants to pop up and complain about the performance of the New Zealand economy, when his Government was responsible for the mess that we inherited at the end of 2008.

Hon John Boscawen: What has to be the productivity growth rate to achieve his Government’s concrete goal of closing the income gap, and does he think it is feasible with current policy settings?

Hon STEVEN JOYCE: I do not have that exact figure here, but a significant improvement in productivity is required and that is why we are taking the steps we are taking. They are, for example, a much more competitive tax system; better regulatory reform, which the member’s colleague has been involved in, to actually reduce the cost of doing business; investing in infrastructure that will improve productivity across the economy, particularly in the bottlenecks of areas like transport and telecommunications; ensuring more productivity in the public sector, something that this Government is very, very focused on; improving trade opportunities—the Prime Minister is going to India next week—and improving education and skills. All those things, which are the policy prescription, will improve productivity over time.

Hon John Boscawen: I raise a point of order, Mr Speaker. My question basically had two prongs to it, and the Minister refused to answer either particular question. He could have answered one or the other, but he answered neither. In particular, I asked him what the productivity growth rate was and he acknowledged that he did not know. He acknowledged that he did not know what was the productivity growth rate required to close the income gap. I then asked whether he believed that the current policy settings were feasible. He went on to outline a number—

Mr SPEAKER: I am not going to let the member litigate any further by way of point of order. The first part of the member’s question was answered. The member may not like the answer, but it was answered and I cannot assist any further with that. The member has a further supplementary question, though.

Hon John Boscawen: I raise a point of order, Mr Speaker. With respect, the Minister actually acknowledged that he did not answer it, because—

Mr SPEAKER: I am not going to have the member arguing with me. He asked the Minister what the productivity growth requirement was to achieve the closing of the income gap by 2025, whatever it was. The Minister answered: he said that he did not know that, or that he did not have the actual figure for that. That is a perfectly reasonable answer for the Minister to give. As for the second part, the Minister did go on to attempt to answer it, when he did not actually have to.

Hon John Boscawen: Does he believe that the Government’s concrete goal of closing the income gap with Australia by 2025, set at the start of this administration, was a good idea; if not, why not?

Hon STEVEN JOYCE: I am not sure about this whole “setting in concrete” thing, but it is the Government’s goal, and it continues to be the Government’s goal. It is absolutely something we are seeking to do, and, as I explained to the member, a number of major policy settings have been enacted in the first period that this Government has been in office that we are putting to the country as evidence of how we are moving to close that gap.