John Key MP
National Party Finance Spokesman
24 March 2006

Economy stationary as Govt fails to prepare NZ

The surprisingly bad December growth figures out today show the Labour Government has failed to prepare the country for stormy economic weather, says National Finance spokesman John Key.

The December quarter Gross Domestic Product declined 0.1 per cent.

“The economy has slowed far more rapidly than expected and is now stationary. While we all knew the economy was slowing in the last half of 2005, this is worse than economists had expected.

“In fact, with Statistics NZ’s recalculation of the September quarter growth from 0.2 to just 0.1 per cent, the economy was stationary in the last half of last year.

“There’s every chance March quarter growth will also be negative – and if that happens the economy will be in a recession.

“Unfortunately, as the slowdown bites we can expect more job losses like those we have seen in the last few months.

“The Labour Government’s missed the perfect opportunity over the past six years to build a more competitive economy so the country was prepared.

“Finance Minister Michael Cullen has squandered the opportunity to strengthen the economy when times were good. New Zealand now faces stormy weather with only a raincoat, not adequate shelter.

“An example of Labour’s poor economic policy has been its spending binge in the core public sector, which has continued to grow while the economy has come to a standstill.

“Government administration and defence growth in the latest quarter was a whopping 3.7 per cent - the 16th consecutive quarter of growth in this area and an indication of just how much Labour’s piled on the bureaucracy at the country’s expense.

“Added to all this is the ugly current account deficit, which in the latest figures out yesterday is running at $13.7 billion - 8.9 per cent of GDP.

“New Zealanders will rue the fact that their Finance Minister has spent the last six years piling on bureaucracy and cost while Australia’s Treasurer Peter Costello has spent his time driving down tax rates, cutting red tape and building a more competitive economy.”

ENDS

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