Mr SPEAKER: Questions for Oral Answer. Question No 1 in the name of Dr Jian Yang.
Dr JIAN YANG (National) to the Minister of Finance: What recent reports has he received on the performance
of the NZ economy and the Government’s management of its finances?
Hon BILL ENGLISH (Minister of Finance): I recently saw the report of international credit-rating agency Fitch Ratings.
This assessment affirmed NZ’s long-term foreign and NZ dollar Issuer Default Ratings at AA and AA+, respectively,
and the outlook on both is positive. This rating reflects the resilience of the NZ economy.
Kiwi households have been saving rather than over-borrowing for 5 consecutive years now.
Our net international investment position, which measures our international indebtedness,
has strengthened from 85 percent of GDP in 2009 to 64 percent of GDP today.
The Reserve Bank has also strengthened, crucially, the resilience requirements on our banking system.
Dr Jian Yang: What are some of the factors that Fitch Ratings identified when making its assessment?
Hon BILL ENGLISH: There were a number, but I will mention just one or two.
It pointed out that the Government’s annual operating deficits have continued to narrow, and it pointed out
that the NZ public sector has relatively low debt, which stood at—according to its methods—35.7 percent of GDP in 2014,
compared with a median of 72 percent of GDP across OECD developed countries.
The Government is getting on top of the deficit,
and we will begin to reduce debt as we achieve surpluses.
Dr Jian Yang: What is Fitch Ratings’ view on the outlook for the Government’s finances and for NZ?
Hon BILL ENGLISH: In terms of the outlook for NZ, Fitch Ratings noted that our growth was 3.3 percent in 2014,
ahead of other AA category countries.
It noted lower agricultural production due to drought earlier this year
and weaker demand following the fall in dairy prices,
and it expects that the pace of economic growth in NZ will ease to around 2.8 percent in 2015.
That is not surprising, but it does show that we are on track for sustainable moderate growth.
Dr Jian Yang: Does that mean that there are no risks to NZ
arising from recent international developments such as those negotiations
occurring between the Greek Government and other eurozone Governments?
Hon BILL ENGLISH: No. The rating agency assesses, essentially, the capacity of NZ to be resilient
in the face of those kinds of risks eventuating.
And it is good news for the economy that Fitch Ratings believes the NZ economy is resilient,
partly because of its relatively low debt levels and partly because
of the flexible microeconomic policies that this Government is pursuing.
Mr SPEAKER: Question No 2, Andrew Little.
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