Goff fumes at Key over nation's credit chop

Labour leader Phil Goff (left) is pressing Prime Minister John Key to take responsibility for New Zealand's credit rating downgrade. Photo / File

Labour leader Phil Goff appeared exasperated in Parliament yesterday as the Government continued to deny it was in any way responsible for the credit rating downgrade last Friday by two of the three main agencies, Standard & Poors and Fitch.

Prime Minister John Key and Finance Minister pointed to the global situation again and private sector debt.

They highlighted the fact that while the agencies were concerned at New Zealand's external liabilities, the current account deficit was actually a lot higher under Labour than National.

Mr Goff: "When, for heaven's sake, will the Prime Minister accept any responsibility for the fact that the downgrading of New Zealand's credit rating by two agencies last Friday was the first downgrading of New Zealand in 13 years, and came three years after he became Prime Minister?"

Mr Key said he was not responsible for what happened in Europe and the United States.

Both ratings agencies had taken some trouble in their statement to mention that the Government books were on the right track.

Mr Key also claimed that at a meeting in New Zealand about a month ago, Standard & Poors said a downgrade was more likely under Labour.

"It did go on to say ... that if there was a change of Government, that downgrade would be much more likely.

Standard & Poors Sovereign rating analyst Kyran Curry could not be reached for comment last night.

Mr Goff said after the House that Mr Key should tell homeowners the truth.

"He should stop trying to wriggle out of taking responsibility for his abysmal handling of the economy."

The downgrade put New Zealand on a par with Spain - a country whose economy had been repeatedly described by National as in trouble.

Mr English told Parliament that the view of New Zealand by the agencies was determined by its large external liabilities most of which was private debt.

From 2005 to 2008 New Zealand's current account deficit was over 8 per cent of GDP which was almost a record for any country and households were spending about $1.11 for every dollar they earned.

By every measure the outlook had improved over the last three years, English said. The balance of payments deficit had halved, households were saving again. New Zealand would have positive savings rates for the first time in 20 years. Foreign liabilities had fallen by $16 billion over the past two years.

"We have focused on getting through the recession while encouraging more saving and exporting and discouraging excessive property speculation, out-of-control Government spending, and too much debt."