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: 15 November 2012. Volume:685;Page:6706. Text is incorporated into the Bound Volume.] 
3. 
DAVID BENNETT (National—Hamilton East) 
 to the  
Minister of Finance 
: What reports has he received on progress in lifting New Zealanders’ household savings and reducing household debt? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Treasury advises that after 10 years of households spending more than they earned savings turned positive last year with a modest savings rate of 0.2 percent of household disposable income. This is expected to steadily increase over the next 3 years to around 3 percent of disposable income being saved by 2015. This process may be assisted by the increase in KiwiSaver contribution rates on 1 April 2013. As a result of better savings behaviour household debt has fallen to 90 percent of GDP this year from a peak of 97 percent in 2010. 
David Bennett 
: How have increases in household disposable income contributed to the lift in savings and the reduction in debt? 
Hon BILL ENGLISH 
: Household disposable income measures all income received in households after tax and less interest on housing loans so the recent figures take into account three rounds of tax changes as well as a significant fall in mortgage interest rates. Treasury advises that between March 2007 and March this year household disposable income increased by about a third. That means that households are making prudent decisions to focus on repaying debt at a time when they have higher disposable income. In the short term debt reduction is reducing demand and consumption but in the long run it will give households the Government and business more choices. 
David Bennett 
: What forecasts does he have of reductions in Crown net debt? 
Hon BILL ENGLISH 
: Crown net debt is rising at the moment because the Government is running significant deficits but as we target a surplus in 2014-15 Crown net debt as a proportion of GDP will then start reducing. The economic and fiscal update in December 2008 showed that on the Government spending trajectory at that time net debt would reach 50 percent of GDP in 2020. Under the decisions made over the last 4 years in Budgets Crown net debt in 2020 is now expected to be less than 20 percent. In dollar terms this means that instead of the Crown having debt of $150 billion as forecast in 2008 it will have debt of $58 billion. 
David Bennett 
: What economic policies are helping to keep inflation low and assisting households to save more? 
Hon BILL ENGLISH 
: Households have done a very good job of saving in the face of reasonably difficult circumstances. A number of policies the Government has put in place are helping them to continue with their saving: first responsible fiscal policy which is helping to keep their interest rates lower than they otherwise would be; sensible monetary policy which gives them certainty about the future and helps to keep the cost of living low; tax changes that reward work and savings and discourage consumption borrowing and excessive property speculation; and policies aimed at giving businesses the confidence to invest and grow and employ more people. 
Hon David Parker 
: Did he really say at the Finance and Expenditure Committee yesterday that “Our problem is one of success.”; if so given that unemployment is at the highest rate since he was last the Minister of Finance and our current account deficit is the second worst in the world and set to get worse how much worse does it have to get before he will admit failure? 
Hon BILL ENGLISH 
: We simply disagree with the member’s diagnosis of the issues. The fact is that in the face of a sharp recession and difficult global conditions New Zealand is on a track to 2 to 3 percent growth. The member’s attempts to sell snake oil on economic policy are not being bought by anyone. Most New Zealanders know that we need to stick to a pretty careful plan around increasing savings careful management of our spending avoiding unnecessary borrowing and doing everything we can to get people into jobs. If we stick to that plan we will do well. 
Hon David Parker 
: Why does he believe that implementing the same economic policies as he did the last time he was the Minister of Finance in 1999—the last time employment was this high—will produce different results this time? Or will he be happy with the same outcome as last time—a change of Government? 
Hon BILL ENGLISH 
: The member should be grateful for the hard work done by the Governments of the 1990s including by the former Treasurer the Rt Hon Winston Peters who left the economy in such good shape that a reckless Labour Government was able to enjoy the benefit of reducing debt and rising surpluses but unfortunately it squandered that decade and now we have got to fix it all up again.