Bennett David: Questions for Oral Answer — Questions to Ministers 
Text is incorporated into the Bound Volume 
Bennett David: Questions for Oral Answer — Questions to Ministers 
[Sitting date: 21 February 2013. Volume:687;Page:8096. Text is incorporated into the Bound Volume.] 
2. 
DAVID BENNETT (National—Hamilton East) 
 to the  
Minister of Finance 
: What reports has he received on rising household incomes? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Westpac has released a report on household income growth since 2008 showing that disposable household incomes adjusted for inflation have risen by $5.7 billion. This is a product of lower household interest payments of $3.3 billion—that is they are paying less in interest—reduced income taxes of $6.3 billion; and welfare payments that increased by $2.7 billion mainly due to an additional 70000 people now being eligible for national superannuation compared with 2008. Offsetting these increases were reduced interest received on savings by those who have put savings in the bank—despite higher savings rates—and reduced profits for companies. Both of these things reflect difficult economic conditions over the past 4 years. 
David Bennett 
: How has household saving changed recently and what reports has he received on household wealth? 
Hon BILL ENGLISH 
: I think as we are familiar with official measures show a significant improvement in the last 3 years from dissaving of 7.1 percent of household income in 2007 to just positive household savings more recently. Alongside that though there is a maybe confusing report from the Reserve Bank which has recently highlighted that in measuring household wealth its statistics exclude some important items. For instance when it measures household wealth it does not include equity in farms. It does not include equity in shares in some businesses and commercial properties and forests nor does it include some types of foreign assets held by New Zealanders. It estimates that when these items are included household net wealth is in fact $167 billion higher than it thought or around 25 percent—that is the Reserve Bank’s revision of the numbers indicates households may be 25 percent wealthier than they thought. 
David Bennett 
: What steps is the Government taking to increase savings and investment and how will this improve New Zealand’s competitiveness and productivity? 
Dr David Clark 
: KiwiSaver flip-flops. 
Hon BILL ENGLISH 
: There is plenty to do—and I am pleased the member mentioned KiwiSaver because probably the next most significant step is that on 1 April the minimum contributions rate to KiwiSaver will rise from 2 percent for employers and employees to 3 percent for employers and employees. We would hope that this may have some impact on national savings rates. 
Hon David Parker 
: Does the Minister of Finance agree that the same Westpac report that he quoted says “this analysis does not extend to how these incomes were spent” and so the figures he quoted do not adjust for the increase in GST and other taxes which largely offset the 2010 income tax cuts except of course for the highest earners? 
Hon BILL ENGLISH 
: I do agree that the report says that but the member is drawing the wrong conclusion. In fact what the figures show is that wage and salary earners and those in the welfare system have had their income supported by the Government and their incomes have increased. Those who were depending on income from savings and from business have tended to have their incomes dropping. Generally that would mean incomes at the higher end dropping and incomes at the lower end rising or at least rising faster. 
Hon David Parker 
: Is he aware that the latest statistics out from Australia today on income comparisons which allow income comparisons between New Zealand and Australia to be updated show that the income gap on a purchase price parity basis has grown from $121 in December 2008 to $179.94 per week or a difference of $887 earned in New Zealand compared with the Australian—you know on a purchase price parity basis—earning $1067 a week? 
Hon BILL ENGLISH 
: I cannot comment on that particular measure but we would expect that since from 2008 up until fairly recently Australian incomes have grown more because their economy grew significantly faster there for a couple of years than the New Zealand economy. However to pick up another one of the member’s favourite measures in recent times the New Zealand dollar has risen against the Australian dollar illustrating the fact that we have reasonably good growth prospects and there is quite a lot of questioning about Australia’s growth prospects. So it could be that over the next 5 years our incomes grow faster than theirs. 
David Bennett 
: What other policies has he seen for saving and investment? 
Hon BILL ENGLISH 
: I have seen put forward a number of other policies that the Government has disagreed with: capital gains tax on every business and farm imposing large costs through a much more expensive emissions trading scheme and printing money which actually is a tax on savers and wage earners. We do not agree with those policies proposed by the Opposition parties.