Clark Prepared to Borrow to Protect New Zealand Jobs, Economy

By Tracy Withers

Nov. 4 (Bloomberg) -- New Zealand Prime Minister Helen Clark, trailing in opinion polls four days before a general election, will borrow if necessary to protect jobs and bolster the economy.

``I'm prepared to borrow for investment,'' Clark said in a Radio New Zealand interview today. There's no point watching ``unemployment go through the roof if you have the capacity in the short-term to invest for the future and get your people productively engaged.''

Clark, who has led the country since 1999, is seeking re- election on Nov. 8 as the economy struggles to emerge from its first recession in 10 years. Turmoil in financial markets has crimped business confidence and hiring, adding to signs the jobless rate will rise to a six-year high.

``We've had a slow year, our main trading partners have had a slow year and they will have a slow year next year,'' Clark said. ``We have to keep our nerve and manage through this.''

A report today showed the government's budget deficit was unexpectedly in deficit in the three months ended Sept. 30 amid a decline in the value of investments and less tax income from financial institutions affected by the market turmoil.

The government last month forecast full-year deficits for the next five years as economic growth slows.

About 30 percent of New Zealand companies surveyed last month expected to fire workers in the next year as demand slows, according to an ANZ National Bank Ltd. survey.

Jobless Rate

The jobless rate probably rose to a four-year high of 4.3 percent in the third quarter, according to the median forecast of 12 economists surveyed by Bloomberg News. The employment report is released on Nov. 6.

Last month, the Treasury Department said the jobless rate may rise to 5.1 percent by late 2009.

Clark plans a mini-budget in December, which will outline her plans to kick-start the economy. She has promised an early start to previously announced programs to refurbish state-owned houses and to build roads and other infrastructure.

``We have budgets for a number of things we can bring forward to get us through a slow patch,'' she said. ``We have to be pro-active about the things we can do which are very job rich.''

Clark pledged she won't cut public spending although there is scope to review the ``mix of spending to see what we can reprioritize.''

The government will also reduce immigration to ensure New Zealanders get the first chance at jobs. The government granted 181,000 permits to foreign workers in the year ended June.

``We have a capacity to move Kiwis into those jobs,'' Clark said, referring to New Zealanders by their nickname.

Last week, Clark said the government will pay an allowance to workers who lose their jobs because of factory closures or staff cuts.

Labour had 35 percent support in a Colmar Brunton poll of 1,000 voters published Oct. 27. The main opposition National party had 47 percent support.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.