5. Hon BILL ENGLISH (Deputy Leader—National) Link to this
to the Minister of Finance
What is Treasury’s most recent estimate of the change in household debt levels since 2000?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
Treasury estimates that household debt has increased from $71 billon to $157 billion. At the same time, total assets have increased from $353 billion to $774 billion, so that the net position is some 2½ times higher.
Has the proportion of disposable household income spent on servicing this record debt risen; if so, by how much?
Hon Dr MICHAEL CULLEN Link to this
Yes, it has risen substantially since about 2004 as we have seen both higher borrowing and, of course, increases in interest rates. That has increased, I think, from about 9.5 percent to about 14 percent of household income as I read the graph quickly.
Hon Mark GoscheWhat reports has he received on support for Government initiatives to improve household savings rates?
Hon Dr MICHAEL CULLEN Link to this
I released a report today that states that, as at 29 February, 470,000 New Zealanders have signed up for KiwiSaver. We now expect to reach the 500,000 mark in approximately 2 weeks’ time. I have also seen reports that KiwiSaver was “a terribly designed system”, other reports that stated that KiwiSaver “was gonna be successful”, and an additional report that the take-up of KiwiSaver would be low. All three of those reports came from Mr Key, who has voted against KiwiSaver 40 times.
What does the Minister say to households who are carrying this record debt, who cannot afford to save in KiwiSaver, who face continued high inflation in their food prices, and now interest rates rising to around 10 percent, driven partly by his excessive spending?
Hon Dr MICHAEL CULLEN Link to this
The Government spending certainly has nothing at all to do with food prices—that is determined by international market prices. I was not aware that National had reverted to trying to set controls on food prices in the New Zealand economy. In terms of KiwiSaver, the member may be quite surprised when the evaluation report comes out that those now entering KiwiSaver through the compulsory enrolment process are very broadly spread across the income range.
Does the Minister stand by his statements last year that New Zealand needs a mortgage interest levy on top of the fixed-rate mortgages to stop people paying too much for houses?
Hon Dr MICHAEL CULLEN Link to this
As the member ought to have known, since his leader was actually quite interested in the idea at the meeting in my room, the mortgage interest levy would have replaced part of the movements in the official cash rate, not be an addition to those movements.
Can the Minister confirm that part of the scheme with the mortgage interest levy was that when interest rates eventually go down, the mortgage interest levy would be imposed, and can he tell Parliament today that if he is re-elected he will not impose a mortgage interest levy when interest rates eventually go down?
Hon Dr MICHAEL CULLEN Link to this
As I think the Prime Minister has already said, the mortgage interest levy is a dead idea, and I assume that in trying to kick a dead horse the member is simply practising to attack his leader after the election.
Given that circumstances have now turned heavily against householders who face record debt, very high interest rates, and high inflation, can he confirm that his proposition for the mortgage interest levy last year was a cynical political exercise that suited him at the time, just as his last-minute intervention in the Auckland International Airport has been, and why has he completely given up on sound economic management, for pure political management?
Hon Dr MICHAEL CULLEN Link to this
I have two responses to that. The member seems to have forgotten that when the mortgage interest levy was floated, the member criticised the Reserve Bank of New Zealand for not having put up interest rates sooner and harder. That was his answer to that particular issue. In relation to Auckland International Airport he seems to have forgotten that by the end of the week, National having started off in confusion had supported a regulation to ban any ownership in excess of 50 percent of strategic assets under any circumstance, an idea that was so bizarre it was adopted within a matter of days by Robert Mugabe.