By Kate Chapman of NZPA
Wellington, June 17 NZPA - The recession has taught New Zealanders to spend less and save more, Finance Minister Bill English says.
New Zealanders will save if they see good opportunities for returns, Mr English told Parliament's finance and expenditure select committee today.
"Savings in the end are about less consumption. You can only grow your savings by reducing your consumption.
"Events in the last six months are pushing New Zealanders in that direction pretty quickly -- they are consuming less... they are saving more."
New Zealanders had had high levels of private debt, he said.
Global credit markets will tighten up as a result of the recession and neither individuals nor the Government will be able to borrow as easily as in the past.
"New Zealanders attitudes I think are going to change too -- we've been incredibly willing to borrow money."
The Government was also looking to save but did not want to fund investment or expenditure with borrowed money more than necessary.
"We can't fix this set of deficits just by getting the debt down and hoping the finance costs will shrink and therefore we'll get back into balance.
"Essentially we are spending considerably more than we're earning and it's not about financing debt, it's about core Government spending."
The Government would invest in infrastructure, regulatory review and the public and education sectors to provide a framework to see New Zealand out of the recession.
It would expect these areas to increase productivity and efficiency.
These were not "silver bullets" but would "cushion against the edges of the recession" and improve economic growth rates in the future, Mr English said.
The New Zealand economy should be relying on the tradeable sector to help it out of the recession, but it is in "poor shape... just when we need it to grow".
Ideally, the exchange rate would drop, boosting exports and therefore creating jobs and investment.
"At the moment the conditions don't look that good for that."
Confidence was down, the exchange rate was high and some tradEables -- the areas of the consumer price index where prices are set internationally -- have high debt.
"Over the next 12 months some of those things might unwind.
"There's an awful lot of work to do to get the export sector back to a competitive state."