Prebble calls on Cullen to fight for credit rating

Monday 10th Jan 2000
Richard Prebble
Media Release -- Economy

ACT Leader Richard Prebble today released his letter to Finance Minister Michael Cullen, urging Dr Cullen to take action to prevent a credit rating downgrade.

Mr Prebble said it was not right for the Finance Minister to simply accept a downgrade and attempt to put the blame on the previous administration.

"Dr Cullen should fight for our country. He should do what Ruth Richardson did in 1991 and go to New York and state our case to Moody's and Standard and Poors," Mr Prebble said.

In his state of the nation speech today, Mr Prebble said the fundamentals of the New Zealand economy were sound and there was a strong case to be made to the international credit agencies, if Dr Cullen would only make it.

"I call on Dr Cullen to go at once, this month, to call on the credit agencies and argue for our present credit rating. It is important that Dr Cullen gets out of negative Opposition-type thinking and starts to work on New Zealand's behalf."

Mr Prebble said in his letter to Dr Cullen that the ACT Party was prepared to give him a letter of support pledging the party's commitment to a balanced budget, an independent Reserve Bank and the Fiscal Responsibility Act.

"I believe Dr Cullen could get similar letters from other party leaders, putting him in a very strong position to argue that a credit downgrade is not justified," Mr Prebble said.

Attached: letter to Dr Cullen

7 January 2000

Hon Michael Cullen

Minister of Finance

Parliament Buildings

Wellington

Dear Minister

New Zealand's credit rating

The international credit agencies Standard and Poors and also Moodys are at present reassessing New Zealand's credit rating. Your most recent statements appear to be preparing the country for the possibility of a further credit downgrade. A credit downgrade is a very serious economic shock. Everyone's interest rates rise - from government to business, to home mortgages, to hire purchase. Higher interest rates affect countries' competitiveness and will cost both jobs and growth. This letter is to urge you not to accept a credit downgrade. Do what Ruth Richardson did in 1991 - go to New York and put New Zealand's case not to be downgraded. The fundamentals of the New Zealand economy are strong. New Zealand has strong growth. Exports are rising. The Government's own budget is in surplus. It is my understanding that as Finance Minister you are committed to an independent Reserve Bank with low inflation as its target and the Fiscal Responsibility Act which commits government to a balanced budget. The Government itself has no overseas debt and I understand that continues to be your policy. This is a good news story. Overseas credit agencies are no doubt concerned that Labour is a minority Government dependent on the Greens and the Alliance. You might find it helpful to get letters of support from the other political parties. Speaking for ACT, I am more than willing to give you a letter from the ACT Party setting out ACT's strong support for the Reserve Bank Act, the Fiscal Responsibility Act and for balanced budgets. The recent recession was principally caused by the Asian crisis and two years of drought, so there is no justification for a credit downgrade. But I believe it will take a strong personal presentation from yourself to stop it. I am sure if you sought support from other parties you would get it from most if not all leaders. What other Finance Minister can go to the international community with such cross-party support for economic stability? It is a good news story, but it has to be told - and only the Minister of Finance can tell it. The time is now - in January. I look forward to your response.

Yours sincerely

Hon Richard Prebble

CBE LEADER, ACT NEW ZEALAND

cc Prime Minister

ENDS

For more information visit ACT online at http://www.act.org.nz or contact the ACT Parliamentary Office at act@parliament.govt.nz.

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