Labour dismisses Government's economy growth claims

DANYA LEVY
Last updated 08:44 21/09/2012

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Labour is scoffing at the Government's suggestions the economy is showing signs of "solid and broad based growth", saying it's relying on a tragic event and high dairy prices.

Statistics New Zealand yesterday announced the economy had grown by 0.6 per cent in the June quarter, stronger than expected.

The economy expanded by 2 per cent in the year to June, the highest growth in four years.

Finance Minister Bill English today said the economy was still suffering "grumpy growth", where some sectors were growing but other sectors were losing jobs.

Growth was "solid and broad-based but still moderate", he told Radio New Zealand.

"This quarter, the growth has been bit better than expected and one of the reasons for it is because quite a number of components have picked up.

"We are on a path to moderate growth and by international standards that's not too bad."

English acknowledged there was "a way to go" before growth lowered unemployment.

"We have now had growth in 12 out of the last 13 quarters. So the prospects of better job security is improving."

The economy would not necessarily now "roar", but the signs were good, he said.

However, Labour's finance spokesman David Parker today said growth had been "anemic" and was overly reliant on the rebuild of Christchurch and the dairy sector.

"We just can't prosper through earthquakes and dairy alone."

The 50,000 New Zealanders moving to Australia every year hid the fact unemployment would otherwise be worse, he said.

"You eventually run out of people for the dole."

Parker said the Government was failing to address the major imbalance in the economy: that New Zealand didn't export enough to cover the cost of its exports and the interest on its loans.

English said the external deficit, the current account, wouldn't deteriorate "as much as it did in the last business cycle" but Parker disagreed, saying it was set to get worse.

Until the high exchange rate was brought under control, New Zealand would get poorer as a nation, Parker said.

The Government has rejected calls from Labour and NZ First to amend the Reserve Bank Act to give the bank the power to reduce New Zealand's overvalued dollar to help exporters.

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- © Fairfax NZ News

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