OECD underlines savings and investment strategy
The OECD's 2007 Economic Survey of New Zealand highlights the critical importance of the government's strategy to lift savings and investment, Finance Minister Michael Cullen said today.
"It is reassuring that the OECD considers New Zealand to be 'one of the most flexible and resilient economies' in the world. Our structural policies are judged overwhelmingly consistent with international best practice," Dr Cullen said.
The Survey assesses that the key challenges facing the country are raising incomes and meeting the fiscal pressures that will arise over the long-term from the ageing of the population. These are objectives we share. One area of clear concern highlighted by the OECD is the issue of households' very low savings performance.
"In this regard, the design of New Zealand Superannuation is applauded and the new savings policy enshrined by KiwiSaver is described as a 'welcome development which should contribute to raising private savings'.
"However, OECD suggestions to pare back national superannuation are not on this government's agenda. The New Zealand Superannuation Fund, our fiscal track record over the last eight years and the government's commitment to low debt levels going forward are designed to better prepare us for the long term challenges of an ageing population. Our success in this regard has been recognised overseas.
"The OECD has highlighted challenges around the high current account deficit, persistent inflation and low productivity.
"We have a sound strategy to shift the mix of growth away from consumption to higher value exporting. Measures that will be announced in Budget 2007 related to the Business Tax Review that will encourage innovation and improve competitiveness are all crucial parts of our integrated approach to better position New Zealand for the long haul," Dr Cullen said.
"This government has run surpluses in recent years to help take the pressure off inflation.
"There is a clear warning in the OECD report directed at those parties that went into the last election promoting large, indiscriminate income tax cuts that would have mainly benefited those already on higher incomes.
"The OECD report is categorical: That sort of reckless additional fiscal stimulus, had it been implemented, would have significantly delayed the necessary rebalancing within our economy. National's policies threaten to exacerbate the imbalances within the economy by putting significant upward pressure on the Kiwi dollar and interest rates. National's policies would worsen our savings performance, instead of contributing to fixing them," Dr Cullen said.
"It is reassuring that the OECD considers New Zealand to be 'one of the most flexible and resilient economies' in the world. Our structural policies are judged overwhelmingly consistent with international best practice," Dr Cullen said.
The Survey assesses that the key challenges facing the country are raising incomes and meeting the fiscal pressures that will arise over the long-term from the ageing of the population. These are objectives we share. One area of clear concern highlighted by the OECD is the issue of households' very low savings performance.
"In this regard, the design of New Zealand Superannuation is applauded and the new savings policy enshrined by KiwiSaver is described as a 'welcome development which should contribute to raising private savings'.
"However, OECD suggestions to pare back national superannuation are not on this government's agenda. The New Zealand Superannuation Fund, our fiscal track record over the last eight years and the government's commitment to low debt levels going forward are designed to better prepare us for the long term challenges of an ageing population. Our success in this regard has been recognised overseas.
"The OECD has highlighted challenges around the high current account deficit, persistent inflation and low productivity.
"We have a sound strategy to shift the mix of growth away from consumption to higher value exporting. Measures that will be announced in Budget 2007 related to the Business Tax Review that will encourage innovation and improve competitiveness are all crucial parts of our integrated approach to better position New Zealand for the long haul," Dr Cullen said.
"This government has run surpluses in recent years to help take the pressure off inflation.
"There is a clear warning in the OECD report directed at those parties that went into the last election promoting large, indiscriminate income tax cuts that would have mainly benefited those already on higher incomes.
"The OECD report is categorical: That sort of reckless additional fiscal stimulus, had it been implemented, would have significantly delayed the necessary rebalancing within our economy. National's policies threaten to exacerbate the imbalances within the economy by putting significant upward pressure on the Kiwi dollar and interest rates. National's policies would worsen our savings performance, instead of contributing to fixing them," Dr Cullen said.