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History repeating as country moves deeper into deficit

History repeating as country moves deeper into deficit

The National Government is sitting on its hands as history repeats itself and New Zealand’s international deficit grows on the back of a housing bubble, Green Party Co-leader Dr Russel Norman said today.

Figures released today by Statistics New Zealand show that the current account deficit has risen to 4.1% of GDP, or $8.8 billion. Treasury projects it will rise to 6.5%, or $16.7 billion, in 2017. Since National has been in power, the current account deficit has totalled $29 billion.

“John Key and Bill English set themselves the task of preventing New Zealand going through another round of housing bubbles fuelled by international borrowing. They’ve failed,” said Dr Norman.

“For the first time in five years New Zealand has imported more goods and services than it has exported. This is bad news.

“The same borrow and spend pattern that drove New Zealand deep into debt in the 2000s is repeating.

“If National were true to their own promises, they would be ringing the alarm bells as the country’s deficit grows. They’re staying silent in the hope that they can pass off reckless borrowing as sustainable growth in election year.

“One cause of the current account deficit is our relatively high interest rates, which lead to an over-valued currency. New Zealand’s relatively high interest rates are bringing in international cash that fuels our housing bubble. As a result, our banks owe $100 billion overseas and send over $3 billion of profits overseas each year.

“Borrowing more and more money from overseas so that we can sell our houses to each other at ever-higher prices is not a path to prosperity. It’s a bubble economy.

“National’s high dollar policy is strangling our hi-tech exporters and fuelling imports. The rising dollar is costing us well-paid, high-skill manufacturing jobs and letting foreign imports undercut domestic businesses.

“The Green Party economic plan will focus on bringing down the dollar to a fair level; stabilising the housing market by driving out speculators and giving families an affordable pathway to home ownership; and backing our high-tech manufacturers so that they can sell their products to the world,” said Dr Norman.

ends

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