﻿Mr SPEAKER: Question No 2, Dr Jian Yang.
Dr JIAN YANG (National) to the Minister of Finance:
What reports has he received on how low inflation is benefiting NZ families?
Hon BILL ENGLISH (Minister of Finance):
I have seen a report from the Reserve Bank quite recently
that forecasts zero percent inflation in the year to March 2015—
that is about now. So we have a very unusual situation
where we have solid economic growth, which is delivering moderate
and—for many NZers—consistent wage increases, but at the moment, at least,
zero increase in the cost of living.
This means that families can get some real increase in their incomes.
At the same time the Reserve Bank indicated an interest rate track
that is a bit lower than what was expected, again assisting
the affordability of what have been, for some families,
rapidly rising housing costs.
Dr Jian Yang: How is solid economic growth and low inflation
benefiting NZ families through strength in the labour market?
Hon BILL ENGLISH: Low inflation— in fact, at the moment,
record low inflation—along with the growing economy is giving
many businesses the confidence to invest more money and employ more people.
Statistics NZ figures show that in 2014, 80,000 new jobs were created
across the country and average wages rose 2.5% last year.
Average wages are expected to grow by a further $6,000
by September 2018, from $56,000 today.
That is an increase of around 20% up to now,
compared with the rate of inflation over the same period of around 11%.
One particularly interesting statistic is that the labour market participation rate—
that is, the proportion of the adult population available for work—
is the highest it has ever been, at 69.7%, indicating that NZers in general
are confident about their prospects of getting a job, even if for some of them
that turns out to be a bit of a challenge.
Dr Jian Yang: What other reports has he seen on the benefits
of economic growth for NZ households?
Hon BILL ENGLISH: An important aspect of the current outlook for the economy
is the confidence of businesses and consumers. ANZ recently released
its consumer confidence survey— the most recent one—which shows
a small lift in consumer confidence, but it is at reasonably high levels,
and they are consistent with growth for the year ahead of around 3%.
The main drivers of this confidence, ANZ reports, are the recent fall
in petrol prices, low inflation, employment growth, and a generally
positive outlook that Kiwis have for wage growth.
Dr Jian Yang: Do current economic conditions of low inflation
but solid growth impact on Government revenue; if so,
what steps is the Government taking to return its books to surplus?
Hon BILL ENGLISH: The current conditions do work well
for the economy but it is clear that low inflation and low oil prices
have a significant effect on Government expenditure and revenue.
For instance, because of the drop in oil prices, we will be expecting
to collect significantly less tax and royalties on oil
over the next 12 months. The Government, though,
in response to this, is continuing to responsibly manage its finances.
We will be continuing to restrain new spending, and that is justified
by the fact that there is low inflation, but also continuing
to increase the quality of public services.
Mr SPEAKER: Question No 3.
Subtitles by the Amara.org community