Smith Nick: Questions for Oral Answer — Questions to Ministers 
Text is incorporated into the Bound Volume 
Smith Nick: Questions for Oral Answer — Questions to Ministers 
[Sitting date: 17 July 2012. Volume:681;Page:3531. Text is incorporated into the Bound Volume.] 
1. 
Hon Dr NICK SMITH (National—Nelson) 
 to the  
Minister of Finance 
: What reports has he received on the economy? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Statistics New Zealand today reported that inflation rose 0.3 percent in the June quarter annual inflation fell to 1 percent its lowest level since 1999 and the CPI is increasing at its slowest rate in more than 12 years. At the same time floating mortgage rates at around 5.75 percent are at their lowest level in 45 years. This is saving a family with a $200000 mortgage about $200 a week compared with what they were paying 4 years ago. These factors are helping New Zealand families save more pay down debt and get ahead. 
Hon Dr Nick Smith 
: What other factors—[ 
Interruption 
] They obviously do not care about the cost of living. 
Mr SPEAKER 
: Order! I apologise to the member but it is not helpful to have a raft of interjections before the question has even started. 
Hon Dr Nick Smith 
: To the Minister of Finance—[ 
Interruption 
] 
Mr SPEAKER 
: Order! 
Hon Dr Nick Smith 
: They obviously do not care about the cost of living. [ 
Interruption 
] 
Mr SPEAKER 
: Order! I apologise to the member. Interjections like that are bound to cause disorder. I now ask members to desist. 
Hon Dr Nick Smith 
: What other factors are helping New Zealanders get ahead? 
Hon BILL ENGLISH 
: Although inflation has been falling the economy has continued growing moderately. This is reflected in real after-tax wages which have increased by about 11 percent since September 2008. The components of this are that gross wages have increased 12 percent after-tax gross wages have increased 20 percent and inflation has been a bit over 8 percent which leaves the 11 percent increase. This is a vast improvement on the situation in the 9 years to September 2008 when New Zealand’s real after-tax wages increased by only 4.4 percent in total. 
Hon Dr Nick Smith 
: How does the current level of inflation at a 13-year low compare with what the Government inherited when it came into office in 2008? 
Hon BILL ENGLISH 
: When the Government came into office in November 2008 annual inflation was running at 5.1 percent rather than 1 percent as it is today. That was because power prices had risen by 72 percent in 8 years petrol prices were around 10 percent higher than they are now and floating mortgage rates were at decade highs of almost 11 percent. The lower inflation we are now experiencing combined with steady increases in after-tax wages mean most Kiwi families are better off now than they were in 2008 and that is why they are able to reduce their debt and increase their savings. 
Rt Hon Winston Peters 
: So Minister who was the Treasurer in charge of writing the two Budgets leading to that brilliant low inflation figure by mid-1999? 
Hon BILL ENGLISH 
: I think it may have been Mr Winston Peters and I know for sure he was under very close supervision by the then Minister of Finance. 
Hon Dr Nick Smith 
: What is the Government doing in these very difficult global financial times to support jobs to support higher incomes and to support economic growth? 
Hon BILL ENGLISH 
: We are focusing on assisting those New Zealanders who can make the decisions that help grow the economy. Among those are people who run and work in businesses. It is when they decide to invest more capital employ more people and pay more that we get economic growth. So in the past 3 years the Government has reduced the tax on work and on that sort of investment and raised the taxes on property speculation. We have also improved the regulatory environment for businesses by reducing the direct government cost to business such as a significant reduction in ACC levies this year and have invested strongly in science and research related to business. Over the last couple of years the economy has created 60000 new jobs. 
Hon David Parker 
: Did today’s CPI figures show a 4.5 percent pre-winter increase in electricity prices and what proportion does he attribute to companies preparing for privatisation? 
Hon BILL ENGLISH 
: None. 
Hon David Parker 
: Did Mighty River Power increase its prices to cover its increased costs including the $400000 per annum increase in its chief executive officer’s salary to $1.7 million per annum in advance of privatisation? 
Hon BILL ENGLISH 
: Mighty River Power like other power companies has been going through cost-cutting efforts because there is more competition in the electricity market due to the reforms made by the Government. My understanding is that most of the electricity price increase recorded here reflects Transpower passing through the cost of its extensive investment programme in upgrading the grid. 
Hon David Parker 
: Has the Minister seen JP Morgan’s response to today’s CPI figures which states “the breadth of the softness in today’s report bears witness to the extent of accumulated slack in the economy.”? 
Hon BILL ENGLISH 
: I think there is quite a plausible line of argument that the relatively low inflation figure today will probably be followed by other relatively low inflation figures due to the fact that the growth outlook around the world is pretty soft. In New Zealand however we continue to grow moderately in line with more recent forecasts. In a world where many countries are slipping back into recession that is not a bad achievement.