Source: New Zealand Parliament – Hansard
Question No. 6—Finance
6. NICOLA WILLIS (Deputy Leader—National) to the Minister of Finance: What concerns, if any, does he have about the performance of the New Zealand economy, and what impact is the performance of the New Zealand economy having on New Zealanders?
Hon GRANT ROBERTSON (Minister of Finance): The New Zealand economy has strong fundamentals, with the IMF, this week, noting that New Zealand had experienced cumulative growth of 10.2 percent since the second quarter of 2020, compared to 8.8 percent for Australia, 7.6 percent for the United States, 7.1 percent for the euro area, and 6.1 percent for the United Kingdom. The impact of the strong underlying performance of the economy means that more Kiwis are in work than ever before, with Stats New Zealand data showing that another 6,000 people entered the workforce in July. I do have concerns, though, which is why the Government is acting to mitigate them. As a small, open economy, New Zealand is at risk from changes in the global economy. We’ve seen over the past few weeks the impact of a deteriorating outlook in China—for example, on our domestic milk prices here. This makes it all the more important that we signed the free-trade agreements with the European Union and the United Kingdom as part of diversifying our export markets. We do see impacts in New Zealand from global interest rates feeding through into higher mortgage rates for New Zealanders, even though the official cash rate has remained steady. As a Government, we are doing our bit to help protect our economy from this global fallout—this includes supporting jobs through new investment in infrastructure, and rebuilding communities devastated by recent weather events. But it does also include cutting our cloth to take pressure off inflation and ensure that the Government’s books remain in a sustainable position, all the while balanced by investments in critical public services, like health, education, and housing.
Nicola Willis: Is he concerned that during his time as Minister of Finance, New Zealand’s inflation rate has been out of control for 27 months so far, leaving New Zealanders to struggle through a cost of living crisis seemingly without end?
Hon GRANT ROBERTSON: As has been noted many times in this House, this is a global inflation crisis. Here in New Zealand, what I can say is that I’m proud of an economy that’s 6.7 percent larger than before COVID. I’m proud that employment has risen in 15 of the past 16 months. I’m proud about the fact that ASB’s economist said, today, that New Zealand’s fiscal metrics remain world class. Throughout this period, we have looked after New Zealanders by supporting them through increases in the family tax credit, childcare assistance, main benefits. All of the things we did to support people through that period of time—opposed by the National Party.
Nicola Willis: Is he concerned that during his time as Minister of Finance, the official cash rate has risen quicker than at any other time during its history, leaving New Zealand mortgage holders scrambling to meet super-sized mortgage payments, as commercial rates, effectively, double?
Hon GRANT ROBERTSON: And, indeed, this, again, is a global trend. I do note for the member that when the Reserve Bank, who are responsible for decisions about the official cash rate, began increasing the official cash rate in, I think it was, October 2021, just days later, the leader of the National Party proposed more spending to increase what would happen with inflation.
Nicola Willis: If high inflation and interest rates are simply a global phenomenon, then why does America have so much lower inflation than New Zealand, and why is it that our domestic inflation rate is higher than our imported inflation rate?
Hon GRANT ROBERTSON: As the member knows, by referring to something that doesn’t exist, called the “domestic inflation rate”, she’s not actually representing the facts on that accurately. The New Zealand economy has recovered earlier than many other countries. That affects the different rates of growth and the different rates of inflation that we see. But what I know 100 percent is that if we had followed the advice of the member and her co-leader, we would have had inflationary tax cuts in the last Budget that would be making things far, far worse for New Zealanders when it comes to inflation.
Nicola Willis: Is he concerned that after six years of him managing the economy, our country is now the slowest-growing in the Asia-Pacific region, in recession, and predicted to be one of the slowest-growing countries in the world next year?
Hon GRANT ROBERTSON: If the member cared to look at the particular table that that number comes from, she would discover that, actually, if you look at the period of time through 2020, through 2021, and through 2022, New Zealand grew above average compared to the countries within that survey. As I said before, our economy began to recover earlier. But now we have the prospect of a member who has told us, time and time again, that she can afford the tax cut that she wants to deliver, now delivering those via four new taxes. The thing that will really cause problems for the New Zealand economy is unfunded tax cuts, a fiscal plan that doesn’t add up, and more inflationary pressure on New Zealanders.
Nicola Willis: Speaking of fiscal plans that don’t add up, can he confirm that under his stewardship of the New Zealand economy, net Crown debt has risen from $5.4 billion in 2019 to $73.3 billion today, and can he guarantee to the New Zealanders that every dollar he has borrowed has been put to good use?
Hon GRANT ROBERTSON: I congratulate the member on her graduation to professor of hindsight economics! Throughout the period of COVID, I stood in this House, sometimes with the support of members opposite, to say “We need to look after New Zealand households, businesses, and the health system”. Sometimes, members opposite asked us to spend even more on that. I’m proud of the fact that New Zealanders emerged from COVID with one of the lowest excess mortality rates in the world, and I’m proud of the money that we spent on things like the wage subsidy, which members opposite went around the country supporting, asking me, writing to me, saying “Why aren’t you spending more?”. The member cannot now look back and change that position. We stood by New Zealanders through the difficulties of the pandemic, and we continue to stand by New Zealanders.
Nicola Willis: Well, is he proud that under his economic management, New Zealand has the largest current account deficit in the developed world, and does he have another excuse for that one too?
Hon GRANT ROBERTSON: The member will be well aware that New Zealand, as an economy that relies, for example, on the foreign exchange earnings from tourism, has suffered during a period of time when tourists couldn’t come here. Our net international investment position is improving. The current account deficit is coming down. But, again, all of the credibility that’s been built up in the New Zealand economy that means that Moody’s have endorsed what we’re doing, that means that the IMF have supported what we’re doing—all of that credibility would be frittered away by unfunded tax cuts for millionaires; that’s what the member’s promising.
Rt Hon Chris Hipkins: Does the Minister of Finance believe that more tourists might come here if we didn’t have prominent politicians travelling around the world, describing New Zealand as wet, whiney, and miserable?
Hon GRANT ROBERTSON: Absolutely that would help—and, in fact, generally speaking, I think it would help if politicians such as that didn’t travel overseas at all.
Nicola Willis: Isn’t it the case that despite his many attempts to blame others, in fact his legacy to the New Zealand economy is a cost of living crisis, recession, deficit, and debt, and is it the case that he is simply carrying on Labour’s proud tradition of leaving the New Zealand economy in tatters?
Hon GRANT ROBERTSON: The member might want to reflect on the level of unemployment when we came into office, which, if I recall, was around 4.8 percent, and the fact that, as the Prime Minister’s already said, we’ve had record low unemployment over a long period of time. We prioritise having people in work. We prioritise making sure that we look after the most vulnerable in our society, that we lift kids out of poverty, that we get people into skills and into training. All of that is at risk from a potential Government obsessed with making sure that they deliver tax cuts for millionaires.