3. AMY ADAMS (National—Selwyn) Link to this
to the Minister of Finance
What progress is the Government making in getting the economy growing and helping Kiwi families get ahead?
Hon BILL ENGLISH (Minister of Finance) Link to this
Very significant progress. The Government is working to get this economy on its feet, because the previous Government ran it into recession in early 2008. Annual GDP growth is currently about 1.9 percent. The Government is putting in a range of policies to lift sustainable economic growth, such as infrastructure investment, new trade deals, science and innovation investment, plans for broadband, very significant tax reform, and sweeping regulatory reform—all of which will help create new jobs and raise New Zealanders’ living standards.
The latest CPI showed consumer prices rose 0.3 percent in the June quarter, mostly due to tobacco price increases, with annual inflation to the end of June of 1.8 percent. Food prices actually fell 2 percent, which was the largest fall since 1960. Electricity prices increased 2.9 percent in the year ended May, and floating home mortgage interest rates are still at near-historic lows, at around 6 percent. These are well below what consumers faced 2 years ago. There will be some one-off price increases in the next few months, such as a GST increase in October, for which beneficiaries, superannuitants, and Working for Families recipients will be fully compensated.
Hon David Cunliffe Link to this
When he said he was “helping Kiwis get ahead”, was he referring to the latest Dun and Bradstreet Consumer Credit Expectations Survey, which shows that 36 percent of New Zealand households are having to use credit cards to pay the bills for everyday expenses?
I think the figures show that New Zealand households are learning that they need to be very careful about debt. This country has a huge appetite for debt. At the moment New Zealanders are being careful with their spending; they are tending to reduce debt. The good news is that export prices and performance are up. That is the rebalancing the economy needs.
The tax package will leave someone on the average wage about $15 a week better off, and an average family $25 a week better off. For superannuitants the news is even better. The married rate for a couple on New Zealand superannuation has increased by about $100 a fortnight since late 2008—an increase of more than 11 percent. The married rate for New Zealand superannuation will increase by another $40 a fortnight from 1 October, reflecting the impact of personal income tax cuts and an adjustment to compensate for the GST rate increase. This will take the married rate to $1,022.12 a fortnight—up by $140 dollars in just 2 years.
Hon David Cunliffe Link to this
Which of the following does the Minister consider to be his Government’s greatest achievement in helping Kiwis get ahead: achieving 5.9 percent inflation by pushing up the rate of GST from 1 October; promising a step change by excavating national parks, then burying the idea; attacking working conditions through the fire-at-will bill; cutting science funding and the research and development tax credits to strangle innovation; or proclaiming the perfection of his own Government’s monetary policy when it is crippling exporters?
Our most significant achievement was to grab this economy by the scruff of the neck after the previous Government had run it down while the rest of the world enjoyed a decade of prosperity. We protected New Zealanders from the sharpest edges of the recession, and now we are putting this economy back on its feet. One personal achievement of mine was to show up to “Mood of the Boardroom”—which that member mysteriously failed to do.
Just about every measure has improved significantly since 2008. In the few years running up to 2008, inflation peaked at 5.1 percent in the year ended September 2008, with no compensation; electricity prices increased by 72 percent in the 9 years ended 2008; the price of petrol reached $2.11 for 1 litre of 91 octane, and it is now about $1.75; Labour put in place an emissions trading scheme that would have doubled the cost on households; and the official cash rate was at its peak of 8.25 percent and floating mortgage rates were almost 11 percent. New Zealand’s hard-working families are much better off now than in 2008.