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Main Parties Trade Blows Over Deficit

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Fuseworks Media
Fuseworks Media
Bill English
Bill English

Wellington, June 25 NZPA - National and Labour continued to blame each other for the country's economic woes today as the latest deficit figures were released.

Finance Minister Bill English blamed the previous government's management while Labour said the Government's moves to cut research initiatives were hamstringing growth.

Figures out today showed New Zealand's current account deficit shrank in the March quarter, mainly due to a fall in imports.

The deficit of $1.25 billion was the smallest March quarter current account deficit since 2004.

The current account, also known as the balance of payments, measures all of New Zealand's transactions with the outside world.

The annual deficit was $15.25b, amounting to 8.5 percent of gross domestic product. That was down from $16.11b and 9 percent of GDP three months previously, but worse than the $14.21b and 8 percent of GDP a year earlier.

During question time in Parliament, Labour finance spokesman David Cunliffe asked what the Government was doing about the deficit.

Mr English said it was a symptom of nine years of poor financial management.

"At the start of the decade the balance of payments was relatively balance. It has grown steadily to 8-9 percent of GDP and has been for three years one of the worst in the developed world," he said.

"Many factors contributed, government spending out of control, households encouraged to borrow excessively, and an export sector that struggled with policy that made it difficult to be an exporter."

National was working to focus on exports, quality investments and sustainable jobs, Mr English said.

Mr Cunliffe said 88 percent of the deficit was investment and he questioned why the Government was liberalising the foreign investment regime.

"Or does he think flogging off more of our land and infrastructure amounts to a sustainable strategy for growth?"

Mr English said the rules were bizarre and that simple approvals were taking as long as six months and needed to be fixed.

Mr Cunliffe said National had axed research and development tax credits and reduced New Zealand Trade and Enterprise funding. "That would have assisted New Zealand firms to innovate and gain new export markets".

Mr English said the previous government had relied on taxpayer subsidies and Crown spending had outstripped economic growth but now the country needed to earn a living.

Labour MP Trevor Mallard said NZX chief executive Mark Weldon briefed SOE chairs on government plans to privatise SOEs over the next two to five years, but Mr English said that was untrue.

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