Collins Judith: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeCollins Judith: Oral Questions — Questions to Ministers[Sitting date: 17 March 2015. Volume:704;Page:2260. Text is incorporated into the Bound Volume.]2.Hon JUDITH COLLINS (National—Papakura) to the Minister of Finance: What recent reports has he received about higher employment consumer confidence and economic growth?Hon BILL ENGLISH (Minister of Finance): I have received Treasury’s Monthly Economic Indicators February 2015report. It notes that retail sales point to solid growth and household consumption supported by reasonable employment growth in the December quarter. It also shows more migration and a pick-up in tourist spending. This report reinforces the unusual conditions we have at the moment with quite low inflation alongside sustained economic growth. These are pretty good conditions for New Zealand families managing their household budgets because low unemployment low interest rates and low inflation make it a bit easier for them to get ahead.Hon Judith Collins: What effect is net migration having on the economy particularly in employment and housing?Hon BILL ENGLISH: Net migration has stayed higher for longer than most people expected with a net inflow of 50900 in the year to December. This is driven by fewer departures to Australia more New Zealanders returning home and somewhat higher inflows from other countries. This is expected to ease though in 2015 with lower net migration. Net migration flows are larger in this cycle than in the 2000s but they are having a smaller effect on house prices for two reasons: first the dominance of 20 to 34-year-olds in this cycle and secondly net migration is more driven by a fall in departures—that is more people staying in their own communities particularly in regional New Zealand—and this has a weaker effect on house prices.Hon Judith Collins: Are there risks to New Zealand’s economic situation?Hon BILL ENGLISH: That is a very good question. There are always risks to our economy which is why no one in New Zealand should be complacent about the progress of our economy. In particular our major trading partners are a critical determinant of our success and as Australia has a higher unemployment rate the Reserve Bank there has cut its cash rate and there is some uncertainty about the Australian growth path. Also in the case of China growth forecasts have been lowered and in the euro area high levels of debt are going to burden their economies for some time although Germany is doing pretty well. In New Zealand the effects of drought might still come through into GDP figures and of course we are expecting some kind of improvement in dairy prices but if that did not eventuate that would represent a risk to the economy.Hon Judith Collins: What reports has he seen on perceptions of higher interest rates and lower growth in the New Zealand economy?Hon BILL ENGLISH: Some people think that interest rates are much higher than they are and that growth is much lower than it is. I have seen one political aspirant who was asked about the official cash rate and answered that he thought it was 7.8 percent when it is actually 3.5 percent—that is interest rates are less than half of what he thought they were. There was another who was asked about growth who thought that it was a bit over 0.25 percent which of course is almost recession when it is actually 2.9 percent or around 3 percent which is moderate growth. These were potential leaders of the Green Party who indicated that they do not really care—Mr SPEAKER: Order!Darroch Ball: Has he received the Northland economic quarterly report stating that Northland still maintains one of the highest rates of youth unemployment in the country with one in five youth not being in employment education or training and that this figure would be even higher if we included those working for just 1 hour a week?Hon BILL ENGLISH: Yes I have seen that. I would be keen to share with the member reports about the Government initiatives in the Youth Service in the Youth Guarantee and in achievement levels at National Certificate of Educational Achievement level 2 which are the most comprehensive and serious attempt by any Government to turn round that long-term problem.