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Date:
1 March 2012
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5. Government Financial Position—Current Account Deficit

[Sitting date: 01 March 2012. Volume:677;Page:750. Text is incorporated into the Bound Volume.]

5. Hon DAVID PARKER (Labour) to the Minister of Finance: What current account deficit, in dollars, was projected in the pre-election fiscal update by the Treasury for 2012 and for 2016; and does he agree with Hon Steven Joyce’s answer in Oral Question No 8 yesterday, that “the pre-election update last year forecast the current account deficit to widen by about just under $5 billion over the next 4 years”?

Hon STEVEN JOYCE (Associate Minister of Finance) on behalf of the Minister of Finance: The Pre-election Economic and Fiscal Update states that the 2012 forecast deficit is $5 billion and for 2016 it is forecast to be $17.6 billion. The two main reasons for this are the rebuild of Christchurch following the earthquakes and an expected easing of commodity prices for our exports. The second half of the member’s question has been dealt with earlier in question time.

Hon David Parker: Did the Minister of Finance require or expect his Associate Minister of Finance Mr Joyce to read Treasury’s briefing to incoming Minister, which also sets out the projected rise in the current account deficit to $17 billion in 2016, and does he know whether Mr Joyce read it?

Hon STEVEN JOYCE: The answer is yes, and we have readings in the Minister of Finance’s office where we read pieces of the briefing to incoming Minister to each other of an evening, to enjoy the opportunity to read the wisdom of Treasury.

Hon David Parker: Can the Minister of Finance assure the House that the Associate Minister of Finance Mr Joyce now understands it?

Hon STEVEN JOYCE: Absolutely, he is confident that Mr Joyce understands it, and he finds him a very good Associate Minister of Finance.

Hon David Parker: If the Associate Minister of Finance Mr Joyce did not previously understand the seriousness of New Zealand’s deteriorating current account deficit, can the Minister assure the House that the rest of his Cabinet does understand that under his policies the current account deficit is projected to increase every year to 2016?

Hon STEVEN JOYCE: The Minister rejects the first part of the premise of the member’s question. The Associate Minister does understand. I have to say, in relation to the second part, there is a little bit of irony there, because it is forecast to widen, but that member was actually part of a Government between 2005 and 2008 where the current account deficit averaged more than 8 percent of GDP over that period.

Hon David Parker: Did Treasury’s Pre-election Economic and Fiscal Update predict that the worsening current account under his Government’s policies results in New Zealand’s net international liabilities increasing to 77.6 percent of GDP by 2016, and is he aware that that equals an increase in New Zealand’s liabilities to foreign lenders and foreigners of approximately $50 billion?

Hon STEVEN JOYCE: Yes, and again I have to say it is interesting because we have had a significant decrease in international liabilities in terms of the actual recorded numbers since this Government has been in office. Yes, it is projected to increase again, which is why the Government is working very hard on a range of matters, including its 120-point economic development action plan, to have an impact on those matters.