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Sustainability

It is important that prosperity is sustainable - tomorrow and in the future.

Sustainable growth depends upon good management of our environment and natural resources, not only as a valuable asset but also as a treasured part of our culture heritage for both Pākehā and Māori. We need to continue to improve the management of our natural resources and infrastructure.

Sustainability also depends on good management of our other resources or assets, including our financial, produced, human and social capital. It is also about resilience of the New Zealand economy to emerging trends and unexpected events. A stable macro economy and flexible markets will support businesses and people to respond to a changing world.

Currently, New Zealand's economic growth is dominated by domestic consumption and the Canterbury rebuild. There are short-term challenges in managing pressures from the rebuild but also from the state of the Auckland housing market. Fiscal policy can help with managing domestic demand. However, there will be little scope to increase expenditure or reduce taxes without putting upward pressure on interest and exchange rates.

We need to move towards exports but also towards where investment is needed to lift economic performance. Higher savings should in principle enable greater investment and, therefore, also higher economic growth. It would reduce demand pressures on interest and exchange rates, providing greater incentives for firms to invest and export. Lifting New Zealand's rate of national saving would also reduce our high net external debt and vulnerability to external shocks.

Net international investment position and gross government debt
Percent of GDP in 2012
Net international investment position and gross government debt Percent of GDP in 2012   .

Key indicators of sustainability

  • Reducing our net external debt and vulnerabilities to external shocks.
  • Strengthening fiscal buffers and reduction in core Crown debt.
  • Continued improvements in management of New Zealand’s natural resources.
  • Government balance sheet well managed in accordance with medium-term objectives.
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