Hon Bill English
Minister of Finance
Strictly embargoed until 12.01am
5 June 2013
Media Statement
OECD backs New Zealand economic policy mix
The Organisation for Economic Co-operation and Development has confirmed New Zealand’s macroeconomic policies strike the
right balance between supporting the recovery and ensuring sustainable medium-term growth, Finance Minister Bill English
says.
In its Economic Survey of New Zealand for 2013, the OECD also notes the economy is gaining momentum, with
post-earthquake reconstruction in Canterbury, and business investment and household spending gathering pace.
“The OECD confirms the Government’s economic plan is on the right track,” Mr English says. “In particular, it notes our
work in improving productivity to support long-term growth, it confirms the banking system is in good shape and well
supervised, and it supports our focus on getting back to surplus and reducing debt.
“It concludes that reducing government debt will establish a favourable starting position for confronting longer-term
cost pressures from an ageing population. It will also tend to raise national saving rates and reduce New Zealand’s
external vulnerabilities.
“This is a welcome endorsement of the Government’s economic programme from the OECD, coming just a few weeks after the
International Monetary Fund also confirmed we have struck an appropriate balance with our programme.”
Mr English agrees with the OECD’s assessment that New Zealand’s high private debt levels, large external imbalances and
an over-valued exchange rate are among the main risks to growth.
“That’s why the Government is taking a number of steps, such as through the Business Growth Agenda and the
internationally-focused growth package in the Budget, to help businesses and exporters become more competitive and to
sell more to the world.
“While the OECD’s modelling predicts relatively small growth impacts from achieving some of the specific Business Growth
targets, taken as a package evidence suggests they could make a material difference to productivity and incomes,” Mr
English says.
The OECD notes that New Zealand policymakers are increasingly attuned to social equity and welfare issues.
It says welfare reforms are attempting to reduce long-run benefit dependency by emphasising education and training for
at-risk youth, placing more conditions on beneficiaries and requiring stronger accountability from public and private
providers.
“I’m pleased with the OECD’s positive assessment of the main elements of the youth package within our welfare reforms,
and other recent changes to increase educational achievement and reduce youth unemployment.
“We will carefully monitor progress to ensure we further improve the participation of young people in education and
training.”
Mr English says the Government does not agree with the OECD about the need for a comprehensive capital gains tax
applying to all assets, including the family home.
“Two comprehensive, expert reviews of New Zealand’s tax system – the 2001 Tax Review and the 2009 Tax Working Group –
did not recommend a widespread capital gains tax of the sort the OECD recommends.
“The Government significantly tightened the tax rules around property investment in Budget 2010, which is expected to
raise an additional $3 billion in tax revenue over four years.
ENDS