New Zealand's housing market is "still way overpriced" by international measures and is likely to struggle for some time, says Finance Minister Bill English.

English spoke to a room full of business leaders at Auckland's annual Mood of the Boardroom breakfast this morning and outlined his assessment of the New Zealand economy.

New Zealanders did not save enough partly because they got everything free from the government and got better returns by taking out debt than saving, he said.

The job market was unfavourably skewed away from the export sector toward government, led by a rapidly expanding prison system set to soon make Corrections the government's biggest department, said English.

And New Zealand's housing market, along with Australia's, was overpriced by international measures, higher than China's, and would likely be "damp" for some time, he said.

Many commentators have predicted that China is in the midst of a property bubble.

"By any international measure, our housing market it still way overpriced. Ours and Australia's are even more expensive than China's. Is it going to stay that way? I would like to hear the case as to why it would," English said.

The economy needed to be rebalanced through a series of considered and consistent policies, he said.

Often in New Zealand politics, change was followed by a period of doing nothing, but the public would be willing to support ongoing change if its reasons were adequately explained, he said.

English said that one powerful influence driving personal debt over savings was government welfare.

"I remember going along to AMP to talk to their staff and they said I was by far their biggest competitor.

"The government gives free childcare, free compulsory education, no interest on tertiary ... and pay per week per child. Everything is free so why should people save?"

By some measures the economy's overall debt levels were as high as Portugal, Ireland, Greece and Spain, and it could not stay that way, he said.

Government departments were working to tighten their belts but frontline services were unlikely to be affected, he said.

During his speech, English also commended Fonterra's share trading plan approved yesterday as the best news in a long time and a world-first initiative.

He also joked that business leaders, like media, would immediately return to being unsatisfied after any positive news, and wanted more.

"My minders reminded me I will not be providing one single [news] story [today].

"The Prime Minister was musing on how there was not much political news coming up. Yes, that's what Kevin Rudd thought last Monday.

"Curiously enough, Rudd was performing reasonably well in normal circumstances. They just didn't like him, I think.

"We've reassured the Prime Minister he's much loved."

Related articles: