Labour questions Govt's plan to lift exports to 40% of GDP by 2025; points to drop to 29% from 33% in 2008; English says exporters doing well despite high NZ$

By Lynn Grieveson

Labour has highlighted a drop in the export sector's share of the economy, as it continues to accuse National of a dangerously narrow focus on primary produce.

Labour finance spokesman David Parker challenged Finance Minister Bill English in Parliament (see video above) over what he said was a failure of National to achieve its promise to raise exports as a percentage of GDP.

In August 2012 English reaffirmed National’s goal to boost exports from 30% of GDP to 40% by 2025, although he warned at the time that the global financial situation and the level of imports required for the Christchurch rebuild could mean some decrease in the percentage of exports to GDP was likely in the short-term before that growth occurred. See Alex Tarrant's August 2012 article.

Parker said English needed to admit failure, given that exports as a percentage of GDP had "fallen from 33 percent when he took office to 29 percent now and the Treasury forecast shows them falling even further to just 26 percent of GDP."

'Exporters resilient'

English said the export sector had "done a remarkably good job in the face of the stiff headwinds of a high exchange rate."

"As usual, on planet Labour there was no global recession so they always count the pre-recession numbers and compare them today," English said, adding that in the year to June the "value of exported goods increased by 12 percent to a record high of NZ$51.2 billion."

He said New Zealanders had been able to "buy more with their kiwi dollar than ever" while exporters have "continued to create jobs, make profits and pay tax and they should be supported for it, not criticised for it."

The exchange in Parliament came just before Fonterra slashed its forecast for the 2014/15 milk payout to NZ$6/kg from NZ$7/kg, which economists said could reduce dairy farm revenues by around NZ$4 billion. See more in Gareth Vaughan's article.

'Too many cows in one basket'

Labour has pointed to the recent falls in dairy and log prices as highlighting the dangers of what it sees as over-reliance on primary industries, with Labour leader David Cunliffe telling reporters outside the Labour caucus meeting earlier in the day that the National government had put "too many of its cows in one basket."

"What we need is a broad based economic plan that diversifies our industries and markets. That's exactly what Labour's on about," Cunliffe said.

"That's part of the reason we launched a NZ$200 regional development fund last week and we are going to be supporting business on the journey from volume to value."