Lower economic confidence realistic - Key

People were being more realistic about the economy, Prime Minister John Key said this morning following a poll last night showing reduced confidence.

New Zealand has come out of recession but a TV One Colmar Brunton poll found confidence that the economy will get better over the next 12 months was slightly down compared to November.

It found 59 per cent was optimistic about the economy - but in the same poll in November more people - 68 per cent - thought things were looking up.

Those who thought the economy would not change much increased by 2 points to 18 per cent while those who thought things would get worse increased by 7 points to 23 per cent.

Mr Key said the results showed fluctuating views. At the end of last year people were relieved the economy had not been as bad as some had predicted and in their relief recorded high rates of confidence.

"When they asked last year it had been terrible and everybody had been really concerned about the economy so relatively speaking it was improving whereas...(now there's) a bit of reality in those numbers at the moment.

"Yes we are getting better but it's quite tough out there for everyone."
Labour finance spokesman David Cunliffe yesterday said it was concerning that confidence was going backwards while the economy was improving.

"The reality is the lack of an economic vision from the National Government is causing increasing concern amongst New Zealanders," he said.

Bumpy recovery

Finance Minister Bill English told TVNZ's Question and Answer programme yesterday that the country was on the road to recovery but the ride could be "a bit bumpy".

Asked whether he thought unemployment would go higher than 7.3 per cent after previously predicting 7 per cent was the maximum Mr English said he hoped it would not go higher.

He said unemployment was higher because of more people entering the job market rather than loss of work.

The Government was doing things that would create jobs including infrastructure projects and schemes to train young people; "in the end the long term policy is what's going to matter for creating sustainable jobs rather than just buying them short term".

Mr Key this morning said he did not think unemployment would go higher.

"My guess is we are pretty close to the top. What we see in terms of those registering on the unemployment benefit is actually really good news. Those numbers are coming down, last week they came down by 1083. That's actually really good because Treasury thought they would go up for the first 10 weeks."

Political support

The TVNZ poll of 1000 adults also asked about support for political parties. It showed support for the large parties largely unchanged - National was up 1 point to 54 per cent, and Labour up 3 to 34 per cent. However smaller parties took a bit of a hit; the Greens dropped from 7 per cent to 4.7 per cent; The Maori Party went from 3.4 per cent to 2 and ACT was down to 1.7 from 2.2. United Future dropped off the rating altogether while the Progressives hung on with 0.4 per cent support.

In the preferred Prime Minister stakes John Key lost some ground down 5 points to 49 per cent support while Labour leader Phil Goff improved up to 8 per cent from 5 in November.

The poll was conducted between February 13 and 17 and had a margin of error of 3.1 per cent.

A TV3 Reid Research poll also out last night put support for the Government up 1.1 points to 56.3 per cent with Labour down 1.2 points to 29.6 per cent. The Greens lost less support than in the TVNZ poll down half a point to 7.3 per cent, the Maori Party was up to 2.4 per cent.

Mr Key scored 49.4 per cent in the preferred PM question while Mr Goff went up 0.2 points to score 8.2 per cent.

Mr Key said ongoing high ratings showed the public supported what the Government was doing.

"I  think it shows people are saying ok we can understand there might be some changes to the tax mix... I think they can also see there are wider economic benefits.

"It's not just about potentially changing GST and lowering personal taxes its about getting on top of the fact that no OECD country owes more to foreigners as a percentage of their borrowing than New Zealand.

"If people earn a bit more they face very high marginal rates - people say that doesn't matter but actually if you lose a lot (in) tax when you earn that extra dollar your appetite to go and earn that extra income is reduced."

- NZPA