Lee Melissa: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeLee Melissa: Oral Questions — Questions to Ministers[Sitting date: 01 July 2015. Volume:706;Page:4973. Text is incorporated into the Bound Volume.]2.MELISSA LEE (National) to the Minister of Finance: How is the Government’s programme of fiscal management helping keep interest rates lower for longer?Hon STEVEN JOYCE (Associate Minister of Finance) on behalf of theMinister of Finance: Government spending is firmly under control. Core Crown expenditure has fallen from 34.1 percent of GDP in 2008-09 and is expected to drop to 30 percent of GDP next year. We have stuck to a $1 billion allowance in Budget 2015 but we are able to spend $1.5 billion per year on new initiatives because we have identified around half a billion in savings and reprioritisation each year. We have come from an $18.4 billion deficit 4 years ago to see steadily rising surpluses into the future. As the Reserve Bank has noted that fiscal restraint is one of the drivers of current low inflation which is helping to keep interest rates lower for longer.Melissa Lee: How do low inflation and lower interest rates help New Zealand families to get ahead?Hon STEVEN JOYCE: In a low inflation environment interest rates stay lower for longer. Mortgage rates are low particularly when compared with floating rates of almost 11 percent in 2008. This means a family with a mortgage of $300000 would be around $240 a week better off due to lower mortgage costs. Low cost of living increases—currently just 0.1 percent over the past year—mean that any pay increases go further. Average annual wages have increased by $5700 in the past 4 years. Treasury forecasts that they will rise by a further $7000 to around $63000 a year by mid-2019. So if we take the 8-year period as a whole the average wage is expected to rise by almost $13000 or over 25 percent while low inflation of around 15 percent over the same 8-year period means that New Zealand householders and families are better off.Melissa Lee: How do lower interest rates support New Zealand businesses?Hon STEVEN JOYCE: Having low interest rates and solid economic growth creates stronger business investment. Annual business investment increased by 13 percent—13 percent—over the past 2 years to record highs and it is expected to increase by a further 15 percent by mid-2018. It is only when businesses invest another dollar or hire another person that we see economic growth more jobs and higher wages. That is why this Government is focused on getting the conditions right to encourage businesses to grow.Melissa Lee: What reports has he received on the outlook for New Zealand businesses?Hon STEVEN JOYCE: Yesterday the ANZ released its Business Outlook survey. This showed business confidence declining from recent highs. There are many challenges for business and the global outlook it has to be said remains uncertain. However employment intentions remain positive with a net 15 percent of businesses intending to hire new people and a net 21 percent of survey respondents reporting positive residential investment intentions. Meanwhile commercial construction intentions lifted to 32 percent. The ANZ noted long-term price trends favour New Zealand’s exports interest rate and exchange rate buffers and strong net migration as New Zealanders come home or do not leave which all moderate economic headwinds.Phil Twyford: Is he concerned that the Reserve Bank’s statement of intent highlights that population growth low mortgage interest rates and increased investor participation are creating a significant risk in the Auckland housing market; if so why has his Government failed to make a dent in any of the supply and demand factors in the housing market which means lowering interest rates is simply adding more fuel to the Auckland housing market?Hon STEVEN JOYCE: Well I am not sure that I would be running the line that low interest rates were bad but the member is simply wrong because we now have—officially this week—the highest rate of house consenting and therefore construction in Auckland in a decade—in a decade.Phil Twyford: You’ve been reading Nick Smith’s press releases.Hon STEVEN JOYCE: I am reading Mr Smith’s press releases but it is actually Statistics New Zealand’s survey that shows consenting of housing in Auckland is the highest in a decade and Mr Twyford should chew that up and swallow it.Phil Twyford: Is it not the case that had his Government acted to prevent the Auckland housing crisis sooner the Reserve Bank would not have had to lift interest rates in the first place last year or introduce loan-to-value ratio restrictions punishing homebuyers all over New Zealand for this Government’s failure to do anything about the Auckland housing crisis?Hon STEVEN JOYCE: The difficulty was that we did not get elected until 2008 and in the 8 or 9 years prior to that after the metropolitan urban limit was set up in Auckland the previous Government twiddled its thumbs for 8 years and did absolutely nothing. In fact it waved through its fellow travellers like Mike Lee and so on and said that they could actually continue to restrict housing in Auckland. This Government has moved very significantly and there is now the highest house consenting in a decade Mr Twyford—read my lips.