English buoyed by Davos atmosphere

Finance Minister Bill English returned from the World Economic Forum in Davos today buoyed by the atmosphere there and saying "the sense of crisis has ebbed away."

"Generally it looks a bit more stable for the developed economies," he told the Herald today.

He also said there was growing interest in the global digitised economy and how it was an increasing threat to the tax base of most countries.

Mr English said developed economies generally look like they were going to grow a bit more than expected "and that's better for us."

However things still looked uncertain in the emerging economies where growth had been faster.

As the bigger economies slowed down their money printing programmes, it was not clear what impact that would have on places such as Indonesia or China to some extent.

He said Europe was in better shape - "not that they have solved all their problems but they do seem to be able to find a path through."

The United States and Japan, the biggest and third biggest economies in the world, were definitely more confident than they had been.

It was the first time Mr English had been to the annual Davos forum in Switzerland which attracts about 2500 political and business leaders and economists.

Mr English met Australian Prime Minister Tony Abbott and discussed the G20 meeting Australia is hosting in November which will tackle the issue of the little tax paid by giant global digital companies.
Mr Abbott raised the issue in his speech at Davos saying the essential principle was that you should pay tax in the country where you've earned the revenue.

"They all want to do something because they are hungry for revenue," Mr English said. "But what sits alongside it is a growing concern from Governments that a digitising economy is also starting to eat away at their [revenue base] - people doing online shopping means they don't consumption tax, a major source of revenue in just about every country - and the guys selling it to them being able to shift their profits around.

"There is no easy solutions to either of those," he said, "but there is growing interest in realising the digitised economy is here to stay and is going to grow rapidly and it's a threat to the tax base."

New Zealand had been invited to attend the G20 and would part of a discussion by the world's largest economies about how they were going to deal with it.

Mr English also met former British Prime Minister Tony Blair who does a lot of consultancy work on public service reform around the world and he got an overview of how other countries were handling the same sorts of issues as New Zealand, namely "trying to get more for less."

Mr English also met Sir Richard Branson who had been very complimentary about Air New Zealand - his Virgin Australia airline is a codeshare partner.

A meeting about the Syria was held on the side lines of the Davos forum which Mr English sat in on: it included the foreign ministers of Iran, Jordan, and Saudi Arabia.

Mr English stayed to attend a meeting chaired by World Trade Organisation Director General Robert Azevedo but also had side line talks with some ministers from the 11 other countries negotiating the Trans Pacific Partnership trade deal including Japan and Canada.

"Everyone I spoke to is focused on getting it done and focused on getting a high quality agreement and there is increasing discussion about more countries wanting to join it."