2. Hon ANNETTE KING (Deputy Leader—Labour) Link to this
to the Minister of Finance
What recent reports has he received on the cost of living?
Hon BILL ENGLISH (Minister of Finance) Link to this
I have seen a report showing that the true test for the cost of living is the rate at which wages, benefits, and superannuation are rising compared with prices. We do not know the situation of every New Zealander and their family, because everyone’s circumstances are different. However, the facts are that the main benefits increase each year by the same rate as prices. New Zealand superannuation has to increase each year by at least the same rate as prices, and over the last 3 years it has increased significantly faster than the cost of living. The after-tax average wage has increased 7.1 percent over the last year compared with inflation of 4.5 percent. So although many New Zealand families feel they are under pressure with rising prices, the outlook for them is reasonably positive.
In light of reports that prices are going up rapidly, what immediate relief is the Government providing for the rising costs of basic necessities—power, rent, phone, food—which have gone up, while according to Major Pam Waugh from the Salvation Army, who was speaking on the radio this morning, a lot of people’s incomes have stayed the same or reduced?
The Government will continue to focus on protecting the vulnerable, particularly through the difficult times we have had, and on policies that will raise incomes. I agree with the major: I think the main pressure on families is that they have had relatively low income growth through the recessionary period. The fact has become clear today that the economy is beginning to grow and develop some momentum, and that gives hope that if we stick to the policies we have, people can expect to see higher incomes in the near future.
In light of the Minister’s answer about low income growth, is the Government now prepared to increase the minimum wage to $15 an hour?
The National Government has increased the minimum wage in each of the last 2 years since it has been the Government. At the current rate of increase it will not be too long before the minimum wage is $15.
Why did the Government say on television last night that relief was being provided to hard-pressed New Zealanders because the average income earner is getting back around $3 a week in accident compensation levy reductions, when the reductions will not apply until April next year—9 months away? Relief is needed now.
One of the reasons ordinary families have been under pressure is that the last Labour Government did such a shocking job of managing the accident compensation scheme that levies had to be put up. Many families will be looking forward to the $600 million reduction in accident compensation levies, from which they will all benefit.
Does he recall National in Opposition demanding that the then Labour Government do something to reduce petrol prices; if so, can he tell the House what National, now in Government, will do to reduce petrol prices now they have reached their highest level ever?
The National Government did do something about high petrol prices: we halved the impact of the emissions trading system. I understand that Labour is promising to double that impact again, plus some. The decrease in accident compensation levies will also benefit people who are buying petrol. We are taking action to reduce the cost of living after 10 years when it grew relentlessly under the Labour Government.
Did he read the report in the Dominion Post today about a middle-income earner who said her weekly food bill is estimated to have increased by $100—that is, to buy the same food she was buying a year ago—and that this has definitely affected her family; if so, is the only response from National at this time that accident compensation levies will be reduced at some time in the future?
No. I did see the story, and I admire the mother for the careful and focused way in which she is contributing to the community in bringing up those children. We really want to support her. In addition to the reduction in accident compensation levies, we have maintained interest rates at the lowest level in 45 years. That family has enjoyed the benefit of tax cuts, and we have put together economic policies that give her now some hope that she can look forward to a higher income over the next 3 or 4 years.
Rahui KateneIs the Minister aware that in a recent Otago University study into food insecurity involving a survey of 19,000 people researchers found that people who are food insecure had a significant—90 percent—increase in risk of higher levels of distress; if so, in light of rising household and fuel costs, when will he implement positive policies that enhance food security for thousands of at-risk households, such as Māori Party policies to eliminate GST from healthy foods and to increase funding for Māra Kai?
The Māori Party, in discussions with the Government, offers a range of fairly constructive suggestions about how to achieve the ends we all want to achieve, which is to protect the most vulnerable through tough times. As the economy lifts, the country will have more choices about how to spread the benefits of growth, but our immediate priority is to achieve a growing economy so that we have some of those choices. In countries where the Government’s books are not under control and debt is out of control, everyone is suffering from large income cuts.
In light of the reports from social agencies on hardship facing New Zealanders, will he now believe social agencies that are providing food parcels at record numbers when they say that many low-income New Zealanders cannot cope with the rising cost of living, which forces them to cut back on the food they eat or to seek handouts to be able to feed their families?
We work closely with social agencies all the time. They have worked with the Government very constructively over, for instance, the Community Response Fund, in which we allocated tens of millions of dollars of extra funding in order to help those agencies with the growing demand caused by the recession. What they want and what we want, though, is to look forward to the opportunity for rising incomes for those families. Taxing more and spending more will not deliver to those families higher incomes.