Ross Jami-Lee: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeRoss Jami-Lee: Questions for Oral Answer — Questions to Ministers[Sitting date: 16 April 2014. Volume:698;Page:17308. Text is incorporated into the Bound Volume.]2.JAMI-LEE ROSS (National—Botany) to theMinister of Finance: What are likely to be the main pressures on interest rates and what steps is the Government taking to help prevent home mortgage rates from returning to levels seen in 2008?Hon BILL ENGLISH (Minister of Finance): We know what the main pressures on interest rates will be because we know the lessons from the period up to 2008. At that time we learnt that runaway Government spending can push interest rates up further and faster. Up to 2008 Government spending jumped 50 percent in the previous 5 years. We also know that a runaway housing market can drive interest rates higher. The effect of both of those mistakes was that floating mortgage rates reached nearly 11 percent by 2008 and inflation exceeded 5 percent. That is why this Government is focusing onbeing careful with any increase in Government spending and is working closely with councils to improve housing supply.Jami-Lee Ross: What other steps is the Government taking to prevent house prices doubling as they did between 2001 and 2007 which created risks for households and pushed up interest rates?Hon BILL ENGLISH: Of course New Zealanders could not afford another doubling in house prices as occurred between 2001 and 2007. So the Government is focusing on a wide range of particular measures to take pressure off the housing market including reform of the Resource Management Act and the Local Government Act reform of the rules around development contributions which have proven to be a significant obstacle in Christchurch and addressing these issues directly with councils through housing accords; for instance the housing accord with Auckland which is on track to reach its first year’s targets and earlier today the housing Minister announced a housing accord with the Christchurch City Council. We acknowledge the significant efforts of both of those councils to ensure that more people in those cities can have affordable housing.Denis O’Rourke: I raise a point of order Mr Speaker. The last two questions asked the Minister to talk about home mortgage interest rates and steps taken in respect of them but he has only talked about house prices and availability and has not addressed at all the question of steps taken in respect of home mortgage interest rates. Perhaps he could be asked to actually address the questions.Mr SPEAKER: I am actually unsure of the point that the member is making. In regard to the second supplementary question around what steps the Government is taking to increase housing supply etc. that was well and truly addressed by the Minister in his answer.Jami-Lee Ross: How have New Zealand families benefited from lower interest rates and smaller increases in the cost of living in recent years?Hon BILL ENGLISH: Lower interest rates and smaller increases in the cost of living are pretty important to households. Floating mortgage rates fell from 11 percent in 2008 to around 6 percent today. For a family with a $200000 mortgage that is a reduction in their mortgage costs of around $200 a week or $10400 per year. It is no wonder that they do not want to go back to record high interest rates as they were paying in 2008. Statistics New Zealand reported this morning that annual inflation has dipped to 1.5 percent in the year to March just a 0.3 percent increase in the March quarter and household electricity prices rose by only 0.1 percent in the March quarter. On average household wage increases are greater than the increase in the cost of living.Phil Twyford: How can he claim that his Government’s record on housing is better when Real Estate Institute of New Zealand data shows that the growth of house prices in Auckland has been nearly 50 percent higher in real terms since 2009 than it was between 1999 and 2008 and that the median house price in Auckland has gone up by $156000 since his Government took office; or is $600 a week just to stand still an achievable savings goal under his regime?Hon BILL ENGLISH: The Government has been dealing with the worst possible circumstances and that has been a doubling of house prices between 2001 and 2007 followed by sharp reductions in supply particularly in our biggest market Auckland and then uniquely in our second-biggest market Christchurch.Phil Twyford: Five long years.Hon BILL ENGLISH: We have been working for 5 years to persuade councils that the rules they make about new land supply and new house building affect house prices. In the last 12 months we have been starting to get somewhere but it has been a long slow process.Jami-Lee Ross: What economic policies would push up interest rates and send the cost of living soaring for New Zealand families?Hon BILL ENGLISH: We know what sorts of policies would do that because we saw them in the years up to 2008: runaway Government spending which jumped 50 percent in the 5 years to 2008 and a doubling of house prices between 2001 and 2007 accompanied by for instance a 72 percent increase in electricity prices in the 9 years to 2008 and a doubling of the cost of the emissions trading system on households. These are all policies of the Labour-Green Opposition.