Parliamentary question: Recession - Government actions for economic growth

Parliamentary question: Recession - Government actions for economic growth
Question Time: February 10, 2009 [Uncorrected transcript"”subject to correction and further editing.] 1. NATHAN GUY (National"”ÅŒtaki) to the Prime Minister: What steps has the Government recently taken to help ease the sharpest impacts of the current recession and prepare New Zealand's economy for future growth? Hon JOHN KEY (Prime Minister) : The Government has taken a number of steps, including introducing legislation that will ensure there are tax reductions from 1 April this year that will provide much stimulus and support to those in great need. We have introduced the ReStart package to ensure that we can provide extra support to those hard hit by redundancy. We have announced the first phase of the Government's reforms to simplify and streamline the Resource Management Act. We announced last week a group of initiatives in the form of the small-business relief package, which will help lighten the load of small and medium enterprises. And we have only just begun. Nathan Guy: Is the Government planning to announce any further measures in the near future? Hon JOHN KEY: Yes. Tomorrow I will be announcing the Government's plans to bring forward a number of infrastructure projects and to start a number of brand new ones. They are in the areas of State highways, school property, and State housing. They are projects that will be ready to start and get under way as soon as possible. In addition, on 27 February I will be hosting the Job Summit, which will bring together the private sector, local government, non-governmental organisations, and public sector participants to discuss how we can ensure that people are kept in employment. Those are, simply, some of the announcements we are making in February, but, of course, we may announce more soon. Hon Phil Goff: Can the Prime Minister confirm that by far the largest part of the so-called stimulus package actually was in Labour's 2008 Budget, where tax cuts totalling nearly $11 billion were legislated for; that the bulk of his tax bill being introduced actually already is in Labour's 2008 tax bill; and that most, if not all, of the projects that he will announce tomorrow have already received approval, are in the pipeline, and are ready to go, as a result of the last Government's actions? Mr SPEAKER: The honourable Prime Minister may answer one of those questions. Hon JOHN KEY: No. What I can confirm is that this Government has taken about 100 or so days to start cutting taxes, whereas Mr Goff's Government took 9 years to cut taxes. What I can confirm is that our package for small and medium enterprises, which includes some of the initiatives that the previous Government had considered, is actually seven times larger than the initiatives proposed by his Government. What I can confirm is that in the 2009-10 period, which his Government's tax cuts had nothing to do with, the effect of our stimulus package is negative 4.4 percent, relative to negative 2.9 percent, in terms of cash deficits. The New Zealand public is rightfully looking towards our Government to ensure they get through this economic recession. Nathan Guy: Has the Prime Minister seen any reports about the level of fiscal stimulus in New Zealand compared with other OECD countries? Hon JOHN KEY: Yes. I have seen a report on fiscal stimulus across the period 2007-10 in all OECD countries. That report shows New Zealand having the third-highest fiscal stimulus in the OECD. This level of fiscal stimulus is an appropriate response to the circumstances facing New Zealand. However, I would warn members who are calling for more that overdoing fiscal stimulus would mean our running very large deficits and building up levels of Government debt that would be a huge burden not just on this generation but on future generations. Maybe Mr Goff could give that some consideration. Hon Phil Goff: Can the Prime Minister confirm that three-quarters of that stimulus package that he is now bragging about is a result of Labour Government actions? Hon JOHN KEY: What I can confirm is that it took 9 years and an impending electoral defeat for the member's Government finally to decide to cut taxes. The reason Labour did not cut taxes was not that it could not afford to do so; the only reason was that the then Minister of Finance, Dr Michael Cullen, had absolutely no interest in cutting taxes. That was why New Zealanders had to wait 9 years for a change of Government in order to have any confidence that their taxes would come down. Hon Phil Goff: I raise a point of order, Mr Speaker. That was a very straightforward question. It required a yes or no answer. I was unable to tell from the burble from the Prime Minister whether the answer was yes or no. Mr SPEAKER: I listened very carefully to the answer from the Prime Minister, and I believe he did address the question. He did refer to measures in respect of fiscal stimulus taken by the previous Government. Hon Jim Anderton: As the Prime Minister in his answer quoted OECD figures for the years 2007 and 2008 in terms of fiscal stimulus, could he confirm that National was not in Government in those years; and, secondly, if the aim of the business tax package was to help ease the effects of recession and prepare for growth, why did it not mention in any way, shape, or form the words "agriculture" or "primary industry", given that primary industry earns 65 percent of our overseas exchange earnings, and why did the word "exports" not come into that package or into any statement that the Government has made since it was elected? Mr SPEAKER: Again, the Prime Minister may answer one of those questions. Hon JOHN KEY: I can confirm that National was not in Government in the 2007-08 period, except for the end of 2008. But I am surprised that the member, who used to be the Minister of Agriculture, does not realise that many farms up and down the country are small to medium enterprises, and that many exporters are, as well. No wonder the agricultural sector was so pleased to see the back of him! Dr Russel Norman: Has the Prime Minister seen the proposal from the United Nations Secretary-General, Ban Ki-moon, for a "Green New Deal", which would address both the global economic crisis and the global climate crisis at the same time; and which elements of the "Green New Deal" will be incorporated in his economic package when it is released? Hon JOHN KEY: I have seen it, and when we announce the projects the member will be pleased to see that some of them address issues not only of energy efficiency but of insulation and climate change. I think he will be pleased when he sees the final package. Dr Russel Norman: Will his Government be following in the steps of the US President, Barack Obama, who is not only addressing elements of a "Green New Deal" but also talking about creating 5 million new and innovative jobs in green-collar industries that will actually save the climate and produce good economic results; will the Prime Minister be following in the steps of Barack Obama, and what elements of his economic package will be along the lines of creating green-collar jobs? Hon JOHN KEY: I have long since learnt that it is dangerous territory to start likening oneself to Barack Obama, but I can assure the member that we will be creating jobs in our economy, and those jobs not only will have consideration for economic growth and for providing good wages for those who are in them but also will have an eye to ensuring that environmental responsibility is taken seriously by our Government. Nathan Guy: Is the Prime Minister concerned about building up excessive levels of Government debt? Hon JOHN KEY: Yes, I am very concerned about New Zealand's future debt levels. In the short term, the prospect of excessive levels of Government debt could well bring about a downgrade from credit agencies. Members will be aware that Standard and Poor's recently gave New Zealand a negative outlook. A downgrade would lead to New Zealanders paying higher interest rates, and would risk our having lower growth rates into the future. I remind the Leader of the Opposition that if he wants to make promises about doing more and spending more, he should know that the money can come only from debt, given our current cash deficit. Maybe he should show some restraint. Hon Jim Anderton: I seek leave to table the award given to me by Federated Farmers for being the only leader in the last election to emphasise the importance of the role of agriculture. Mr SPEAKER: Leave has been sought to table an award. I remind the honourable member that it must be tabled before the end of the day. Is there any objection to that course of action? There is no objection. Document, by leave, laid on the Table of the House.

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