Finance

The Labour Party's attempts to talk down New Zealand's economic performance have hit a new low this weekend with David Parker making at least nine factually incorrect statements in one short interview, Associate Finance Minister Steven Joyce says.

In the interview, with TV3's The Nation programme, Parker made assertions about low export prices, a poor balance of trade, job losses in the export sector, New Zealand’s current account deficit, high interest rates, a lack of business investment, 40 per cent house price increases, no tax on housing speculators, and low levels of house building.

Mr Joyce says all of Mr Parker’s assertions in relation to these nine things are incorrect.

“This is an appalling number of errors for someone who would seek to run New Zealand's economy. This number of errors surely can't have been made by accident,” Mr Joyce says.

“Mr Parker's attempts to describe the New Zealand economy sound much more like the situation this government inherited from Labour in 2008 than anything we are seeing in 2014.

“He must have been thinking of 2008 when he talked of ridiculously high interest rates, a poor balance of trade, and the poor performance of the export sector. All were pretty sick back then and all are in much better shape today as a result of this government's careful stewardship of the economy.”

Mr Joyce says there are two possible conclusions. “Either Labour is deliberately fudging the facts to fabricate the need for their radical economic policy prescription, or they have truly woken up in 2014 for the election without observing anything that has happened in the last five years. The latter would at least fit their regular denials of the impacts of the GFC and the Canterbury earthquakes.

“New Zealanders know that this country today is doing better than most other developed countries, and in 2008 we were doing worse than most, in fact entering our own recession before the Global Financial Crisis,” Mr Joyce says.

“It might be an idea for Labour to look at the steady improvements that are occurring in the New Zealand economy before they start trying to write up their policy ideas.”

Schedule of inaccuracies in David Parker interview on The Nation - April 26 2014

1. "Export prices are going down"

Export prices in fact rose 13.8 per cent in the year to December 2013 (Statistics New Zealand).

The ANZ NZD Commodity Price Index rose 11.6 per cent in the year to March 2014 and is just 6 per cent below its all-time March 2011 peak.

2. "We are not covering the cost of our imports (and interest)"

Statistics New Zealand reported a merchandise trade surplus for New Zealand in the year to February 2014 of $649 million (1.3 per cent of exports).

January and February's merchandise trade surpluses were the highest ever for their respective months.

3. "We are losing jobs in the export sector"

The number of people employed in the agriculture, forestry, fisheries, mining and manufacturing sectors has increased by 16,100 in the last twelve months.

Total New Zealand employment increased by 66,000 in the last year or 3.0 per cent in one year. This is the fastest employment growth since December 2006. (Statistics New Zealand Household Labour Force Survey December 2013).

4. "This challenge of getting New Zealand's current account deficit under control"

New Zealand's balance of payments deficit is currently 3.4 per cent and has averaged only 3.1 per cent over the last four years.

Under Labour the Balance of Payments peaked at 7.9 per cent in December quarter 2008 and averaged 7 per cent over their last four years.

New Zealand's Net International Investment Position is currently down to 67 per cent of GDP after peaking at 85.9 per cent in March 2009.

5. "Ridiculously high interest rates"

Interest rates have just edged up above 50-year lows.

Floating mortgage interest rates are currently between 6 and 6.25 per cent. They peaked at 10.9 per cent between May and August 2008.

6. "Exporters.... Aren't willing to invest in plant"

Investment in plant, machinery and equipment by New Zealand companies was up 7.5 per cent in the December quarter and 3 per cent for the year. Investment in plant, machinery and equipment is now at its highest level ever (Statistics New Zealand – December quarter 2013 GDP release).

Just yesterday, long term New Zealand forestry processor Oji Limited announced a $1 billion investment to purchase Carter Holt Harvey Processing assets.

7. "House prices are up 40 per cent under them"

House prices under this government have increased at around 5.7 per cent per annum, compared to 10.7 per cent per annum under Labour, according to REINZ figures. Total house price increases over the period is 30 per cent, not the 40 per cent Mr Parker claims. That compares with a 96 per cent increase in house prices under Labour.

8. "You need to tax the speculators. They are not taxing speculators"

Taxpayers who buy and sell houses for income are currently taxed at their personal income tax rate on their capital income.

9. "They are not building any more houses"

The actual trend for the number of new dwellings, including apartments, is up 95 per cent from the series minimum in March 2011.

The trend is at its highest level since October 2007 (Statistics New Zealand February 2014 Building Consents Release).