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OECD in town for 2017 economic review; Focus on medium-term fiscal risks; Finance Minister Joyce is ‘sure they’ll talk about housing’

OECD in town for 2017 economic review; Focus on medium-term fiscal risks; Finance Minister Joyce is ‘sure they’ll talk about housing’

The OECD is in town conducting its latest biennial review of the New Zealand economy and the government’s books.

Finance Minister Steven Joyce said Tuesday afternoon that he met with officials from the Organisation for Economic Cooperation and Development that morning. He dropped the mention during a speech to the NZ Institute of Public Administration New Zealand in Parliament.

Discussions with the OECD included what an appropriate government debt target was for a small, open economy like New Zealand, Joyce told the public service delegates. The speech was focused on improving productivity in the public sector.

Speaking to media outside the event, Joyce said the OECD officials had made it clear they thought New Zealand was one of the top performing countries in the 35-member developed country club.

Officials were looking at policy paths over the next 20-30 years, he said. “Things like how the skills market is working, growth in research and development, fiscal risks out over the medium-to-longer term, those sorts of things, rather than…immediate challenges.”

They will also “make some comments on housing, I’m sure,” Joyce said.

Debt path discussion

Meanwhile, Joyce told the public service delegates during a Q&A session after his speech that the government was yet to have a discussion on what it might do once its net debt hit 20% in 2020/21. While it would like to see debt trend downwards over time, government also had to strike a balance, he said.

The public “also have a claim on the government’s revenue,” he said. Joyce last week signalled he was leaving the door open for tax cuts, potentially in this year’s budget and in following years.

While a National-led government would not let debt blow out again after hitting the target, Joyce told media a discussion was needed on what the longer-term debt track was beyond that point.

“I’m sure we’d want to see a continuing declining path but it’s an open question yet as to what sort of timeframe we’d want,” he said.

Read about the OECD’s 2015 Economic Survey of New Zealand here.

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