3. Question No. 3—FinanceANDREW BAYLY (National—Port Waikato) to the Minister of FinanceQuestion No. 3—Finance3. ANDREW BAYLY (National—Port Waikato) to the Minister of Finance: Has he reassessed any of his spending plans since Statistics NZ reported inflation is 3.3 percent and most banks are now predicting swift increases in interest rates over the next year?Hon GRANT ROBERTSON (Minister of Finance): The Government constantly assesses the investments it makes as New Zealand's economic recovery from COVID-19 continues at a faster rate than other countries due to the success of our public health measures and economic plan. With regard to the member's reference to the inflation rate I would note that Stats New Zealand's latest report is that annual Consumers Price Index inflation was 3.3 percent in the year to June 2021. I would also point out Stats New Zealand's comment Part of the annual increase was attributable to the fact it is measured against the June 2020 quarter a period impacted by the COVID lockdown where some prices fell." This 3.3 rate compares to the OECD one of 3.8 percent to May this year.Andrew Bayly: Is he concerned by ANZ predicting that New Zealand is about to experience the "most aggressive interest rate [rises] since 2004" and if so has the Government identified what low quality spending it can cut to help prevent this?Hon GRANT ROBERTSON: In reference to the first part of the member's question I'd note that Stats New Zealand has not reported that most banks are now predicting swift increases in interest rates over the next year. The retail banks are forecasting the official cash rate (OCR) to be between 1.3 percent and 1.8 percent in a year's time. In September 2017 the OCR was 1.75 percent so the forecasts are showing that interest rates are back to where they were under the previous Government.Andrew Bayly: Does he think that all of the big-spending initiatives announced by the Government over the last 18 months are still necessary given the surge in the cost of living and predicted aggressive interest rate rises?Hon GRANT ROBERTSON: I think that the Government's response to COVID-19 to make sure that we kept people in jobs—that we invested in strong public services—was exactly the right response. If the member is advocating large-scale cuts in health and education well that would be typical of the National Party but I don't think it's wise.Andrew Bayly: Does he still believe monetary and fiscal policy should work together and if so will he follow the Reserve Bank's lead and reduce the wasteful spending that's driving up the cost of living?Hon GRANT ROBERTSON: I reject the premise of the member's question.Andrew Bayly: What advice if any has he received on the impact faster than expected increases in interest rates will have on the ability of thousands of New Zealand homeowners with mortgages who have to pay their mortgages over the coming years and months?Hon GRANT ROBERTSON: Well as I said in earlier answers what happens with interest rates has not yet happened. In terms of the Reserve Bank that is the Reserve Bank's decision. I have been very clear over the last year and a half that everybody who takes on mortgage debt needs to be aware that interest rates do move up and down over time.Hon Chris Hipkins: Does he believe that the biggest drivers of the increase in Government spending such as responding to COVID-19 keeping New Zealanders in work and rebuilding our run-down infrastructure amount to wasteful spending? Hon GRANT ROBERTSON: No I don't and that's the very point I was making in my earlier answer to Mr Bayly. If the National Party is now proposing cuts in all of those things I think New Zealanders will be very interested to hear that.Andrew Bayly: What advice if any has he received about the impact aggressive interest increases in the mortgage rates will have on the costs passed on to renters or the ability of first-home buyers to afford to take out a mortgage?Hon GRANT ROBERTSON: The member will be aware of the actions of the Reserve Bank in regard to that including their consultation around loan-to-value-ratio changes and debt-to-income ratios. On this side of the House we're getting on with building more houses and obviously we've taken the action that we have when it comes to interest deductibility."