Ardern Shane: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeArdern Shane: Questions for Oral Answer — Questions to Ministers[Sitting date: 31 July 2013. Volume:692;Page:12103. Text is incorporated into the Bound Volume.]1.SHANE ARDERN (National—Taranaki - King Country)to theMinister of Finance: What reports has he received on trends in the cost of living for New Zealand families?Hon BILL ENGLISH (Minister of Finance):Statistics New Zealand recently issued the Consumers Price Index for the June quarter. It showed consumer prices increased 0.2 percent in the 3 months to 30 June following a 0.4 percent rise in the March quarter. In the year to June consumer prices rose by 0.7 percent the lowest annual increase in the cost of living for nearly 14 years and a fourth annual increase below 1 percent. The output for inflation remains subdued. The pressure on families from inflation and interest rates is likely to be moderate rather than significant with interest rates sitting near 50-year lows. Many households are still dealing with the challenges and the aftermath of the recession including the need to reduce their household debt.Shane Ardern: What were some of the factors contributing to the low rate of consumer price inflation in the June quarter?Hon BILL ENGLISH: In any given quarter there are prices going up and prices going down. Petrol prices in that quarter fell 2.5 percent; since then they have increased. Fruit prices fell 4.5 percent while both new and second-hand car prices fell by 1.9 percent and 1 percent respectively. On the other hand vegetable prices rose 7 percent in the June quarter. However overall consumer inflation remains low by historical standards. It is certainly better than late 2008 when the Government took office when annual inflation was running at 5 percent. It is now currently running at 0.7 percent.Shane Ardern: What contribution did electricity prices make to the latest consumer price data and how does this compare with the trend in electricity prices in previous years?Hon BILL ENGLISH: Statistics New Zealand reported that electricity prices increased by 3.4 percent for the year although it is worth noting that prices are normally revised in the June quarter. This reflects in part increased transmission prices to pay for the long-overdue upgrade of the national grid an upgrade initiated by the previous Government. The increase in electricity prices should be seen in the context of low overall inflation—that is when the basket of goods and services purchased by the household is taken into account including electricity inflation was 0.7 percent for theyear. Market expectations are for wholesale electricity prices to fall in the next few years—that is the wholesale prices. For example using the CPI measure electricity prices jumped more than 60 percent in the 9 years the Labour Party was in office—over 7 percent per year year on year for 9 years. Now we are meant to believe it knows how to lower prices.Hon David Parker: Does the Consumers Price Index show the rapid increase in second-hand house prices where in Auckland we have double-digit—Hon Steven Joyce: What’s a second-hand house you clown?Hon David Parker: A second-hand house is not a new one you clown. [Interruption ]Mr SPEAKER: Order! [Interruption ] Order! Would the member please continue. If he wishes to start his question he is welcome to do so.Hon David Parker: Thank you. Is the Minister aware that the Consumers Price Index does not include the price of second-hand houses which are increasing in Auckland at a rate of more than 10 percent per annum?Hon BILL ENGLISH: I am aware of that. I am also aware that for a number of reasons including the Government’s management of its own finances interest rates have been at 40-year lows which has enabled families to get their debt down and in some cases to trade up in their houses. We also know that the single biggest influence on reducing the rate of increase of house prices in Auckland and everywhere else is to increase the supply of new houses to the market. We look forward to the support of the Labour Party for the legislation that is going to allow us to do that coming through this House in the next few weeks.Shane Ardern: What do the latest statistics show about the growth in wages compared with changes in the cost of living?Hon BILL ENGLISH: The quarterly employment survey from Statistics New Zealand shows that the average full-time weekly wage rose 2.5 percent in the year to March compared with inflation of 0.9 percent in the year to March. Over the last 2 years the average wage rose 5.9 percent compared with inflation of 2.4 percent. Every family of course has its own particular circumstances but it is clear that on average wages have been rising significantly faster than the cost of living.