English confident in growth forecasts... more or less

Finance Minister Bill English. Photo / Mark Mitchell

Like every finance minister in the world, Bill English would surely wish the clock turned back a month or so to give American and European politicians another go at averting - rather than inviting - a nasty sequel to the global financial crisis.

Treasury forecasts that the New Zealand economy will be growing by as much as 4 per cent in a couple of years were the glue that held English's Budget together this year. Those forecasts are starting to look a bit sickly amid talk of double-dip recessions - something Act's John Boscawen was unkind enough to note in Parliament yesterday.

English and the Prime Minister have sought to reassure people that whatever the fallout from the international debt crisis and subsequent mayhem in the financial markets, New Zealand is better placed to cope than most countries thanks to the Government's efforts to get its books back into surplus and thereby keep debt firmly under control.

Boscawen, however, observed that achieving such goals was predicated on relatively high growth rates in 2013 and 2014 bringing a surge in tax revenue. He asked how people could have confidence in the Finance Minister's low debt projections at a time of massive global uncertainty.

This drew one of English's more inscrutable replies. "The forecasts could be more or less than what was in the Budget. Just a few weeks ago most people were saying they could be more; maybe by this week they are saying they could be less."

Regardless - he added - the Government was not altering its forecasts every time something happened on the international stage. He remained "reasonably confident" in the growth forecasts because they were driven by "reasonably good" demand for New Zealand's exports and the pending boost to the economy from rebuilding Christchurch.

If English wanted to wipe recent history, Stuart Nash was bravely trying to rewrite it. Labour's revenue spokesman fired a series of questions at him with figures suggesting the economy was in better shape when Labour lost office in 2008 than it is now after three years of National. No doubt Labour would like such a perception to gain currency given the economy will dominate the campaign for November's election.

Labour is whistling in the dark. English promptly reminded Nash that Treasury forecasts issued just before the 2008 election had projected 10 years of deficits and ever-increasing public debt.

"This economy went badly off the rails well before the global financial crisis. Debt blew out, government spending blew out, and our export sector actually started shrinking.

"We have had to deal with the legacy of the previous Government's policies, as well as the global recession. Under the circumstances, we have done reasonably well."

But Nash persisted. He said the "facts" clearly showed the country's economic position had deteriorated since National took office. When would English present a real plan for the economy like Labour's?

English hesitated for a moment. "I can make this absolute commitment," he replied. "We will never produce an economic plan like Labour's."