Cunliffe David: Questions for Oral Answer — Questions to Ministers Questions to Members 
Cunliffe David: Questions for Oral Answer — Questions to Ministers Questions to Members 
[Volume:667;Page:14633] 
3. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
 to the  
Minister of Finance 
: What were the main price rises that led to the 1.1 percent inflation surge in the September 2010 quarter and how has the Government acted to control those price rises? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 First of all it is not at all apparent that inflation has surged. The 1.1 percent inflation in the last September quarter is the lowest September increase in the last 3 years if the member had not noticed. It is certainly lower than the 1.5 percent inflation in the September quarter in 2008. As the member knows the Reserve Bank is responsible for the general management of inflation consistent with the policy targets agreement. 
Hon David Cunliffe 
: How much of the impact of the Minister’s 2.5 percent increase in GST costs was reflected in the 1.1 percent increase in prices in the September quarter and does the Minister then stand by Treasury’s Budget forecast of 5.9 percent inflation for 2011; if not is it the fragility of the recovery and persistent high unemployment that have led him to revise his estimates in the recession? 
Hon BILL ENGLISH 
: I think that Treasury’s forecast for inflation for the next 12 months is probably a bit high. The Reserve Bank has since revised its forecast down to closer to 5 percent. The important fact is that where GST is contributing to inflation over the next 12 months everyone who is on a benefit on national superannuation or on Working for Families has already been compensated for that increase in GST. Those who are working have had income tax cuts that are larger than the increase in GST. Therefore the GST impact on inflation will not erode their real wages. 
Hon David Cunliffe 
: How does he reconcile his claim that New Zealanders seem to be enjoying record wage increases with widespread job losses in the manufacturing retail and construction sectors; reports that median incomes which is where most people are are in decline; and reports from Veda Advantage that record numbers of New Zealanders are struggling to pay their bills? 
Hon BILL ENGLISH 
: I do it by just looking at the facts. The facts are that real after-tax wages are rising. Inflation has been relatively low there have been two rounds of tax cuts and real after-tax wages are rising. If the member is so concerned about high inflation why is he advocating a policy for the Reserve Bank that would ensure higher inflation? 
Todd McClay 
: How does the latest inflation data compare with the situation historically? 
Hon BILL ENGLISH 
: In September 2008 when the economy had been in recession for 9 months under Labour annual inflation was 5.1 percent and real after-tax wages were falling. In the last 2 years consumer price inflation has totalled just 3 percent—less than half of the inflation rate in the last 2 years of the Labour Government. 
Hon David Cunliffe 
: How is cutting holiday entitlements firing workers at will with no reason given eroding the rights of worker representatives and the rest of his Government’s Draconian anti-worker agenda contributing to New Zealand families being better off and able to afford his Government’s price rises and extra GST; or were the thousands of New Zealanders on the forecourt of Parliament at lunchtime wrong? 
Mr SPEAKER 
: I told members a moment ago that the time for the general debate is after question time. That question went on and on and on. 
Hon BILL ENGLISH 
: The Government is not doing what the member alleges. It is bringing the employment trial period into line with just about every other developed country. I must say that it is getting very crowded on the left of the Labour Party. Phil Goff David Cunliffe and Andrew Little are all headed for that same little corner. 
Todd McClay 
: What do the Reserve Bank forecasts show for the inflation track over the next few years? 
Hon BILL ENGLISH 
: In the monetary policy statement last month the Reserve Bank forecast that headline inflation is likely to settle at around 2 percent through 2012-2013 after reaching a peak during 2011 primarily because of the GST increase. The Reserve Bank noted that a one-off GST rise and costs associated with the Canterbury earthquake will see an increase in inflation in the next year.