Foss Craig: Questions for Oral Answer — Questions to Ministers 
Foss Craig: Questions for Oral Answer — Questions to Ministers 
[Volume:667;Page:14544] 
2. 
CRAIG FOSS (National—Tukituki) 
 to the  
Minister of Finance 
: What reports has he received on the economy? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Yesterday Statistics New Zealand issued the consumer price index for the year to September 2010. It showed that annual inflation was just 1.5 percent which is the lowest annual figure since 1.5 percent inflation in the year to March 2004. The last time inflation was lower than 1.5 percent was in the year to December 1999. The consumer price index figures confirm that cost of living increases have generally been low and we may put those low cost of living increases alongside relatively low wage increases. In fact real wages have been gradually increasing which is the opposite of what was happening under the previous Government. 
Craig Foss 
: How does the latest inflation data compare with the situation 2 years ago? 
Hon BILL ENGLISH 
: In the year to September 2008 when the economy was in deep recession annual inflation was 5.1 percent. The Government of the day was not proposing any compensation for anybody and as a result of 5 percent inflation real after-tax wages were falling. In the last 2 years the consumer price index inflation has totalled just 3 percent which is less than half of the 7 percent inflation in the 2 years to September 2008. 
Craig Foss 
: What are some examples of trends in consumer prices in the last 2 years and how do they compare with price movements in the previous 2 years? 
Hon BILL ENGLISH 
: In the 2 years to September 2008 overall food prices jumped 15 percent. In the 2 years since then food prices have risen but they have risen by only around 5 percent. In addition to changes in food prices petrol prices jumped 22 percent in the 2 years to September 2008 and they have actually fallen by 14 percent since then. House rents have increased 6 percent in the 2 years to September 2008 and the increase in the past 2 years has been about 3 percent. The general pattern is that up to September 2008 real wages were falling and since then real wages have been rising. 
Hon David Cunliffe 
: Why is the Minister trumpeting his success in bringing down inflation when it is a direct result of the worst recession in 70 years and if he is picking a year to quote inflation does this mean he will next be picking 1929? 
Hon BILL ENGLISH 
: Well no. The issue has come up because the Labour Party has been claiming that the cost of living is out of control— 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. I think you will agree with me that the supplementary question was quite direct and quite without political epithet. It simply asked about the relationship between his claims to have lowered inflation and the recessionary conditions. Instead of answering that with facts he began a tirade about Labour Party policy which he is clearly worried about. 
Mr SPEAKER 
: If I recollect correctly the member in asking his question asked why the Minister was using certain figures and the Minister was explaining why. The Speaker cannot assist if the member does not like the Minister’s reasons but he is certainly at liberty to explain why. 
Hon BILL ENGLISH 
: Well of course the recession has had some impact on inflation. But the member cannot have it both ways. He cannot claim it is out of control and then say it is low because of the recession. But he himself might be able to explain how he managed under his Government in a deep recession to achieve 5 percent inflation—very high—in 2008. 
Craig Foss 
: How have real and after-tax wage movements also left New Zealanders better off since September 2008 and how do these figures compare with those for the previous 2 years? 
Hon BILL ENGLISH 
: If one uses the series of numbers that are used to determine national superannuation which both Governments have used for some time one will see that real inflation-adjusted gross wages have increased 5 percent in the last 2 years after no movement at all in the 2 years to September 2008. If one looks at real after-tax wages taking into account two rounds of tax cuts under the National Government one will see that these have increased 9 percent in the last 2 years. This compares with the 1 percent fall in the 2 years to September 2008 and a meagre 3 percent rise in real after-tax wages from 1999 to 2008. 
Hon David Cunliffe 
: Why would Kiwi families care about the square root of his housing allowance or some other number concoction when what they know is that every week they are finding it harder to make ends meet when median wages dropped by 9 percent in the last year—$9 a week—and vege prices for example have increased 20 percent? 
Hon BILL ENGLISH 
: In the last few weeks the Government has implemented its change in tax policy and many New Zealanders will be finding that the reduction in income tax is giving them higher wages each week. Those higher wages more than offset the extra GST so they are better off. More important the tax switch will help us build a strong economy with more investment and more jobs and in the longer term even higher incomes. 
Craig Foss 
: What reports has he received on New Zealand’s tax changes this month which have left the vast majority of New Zealanders better off? 
Hon BILL ENGLISH 
: I noted a report from KPMG— 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. I am sorry; I assumed you would interrupt that question. The degree of assertion in that question— 
Mr SPEAKER 
: The member will resume his seat immediately—right now. If he had listened to his colleague’s question only a few moments ago he would know that it contained more statements asserting facts than were in Craig Foss’ question. If the member wants me to clamp down on that kind of question I am very happy to but at least half of his colleagues’ questions would be ruled out. 
Hon BILL ENGLISH 
: I noted a report yesterday by KPMG that set out two things. The first is that New Zealand is unique in the world in matching higher indirect taxes with income tax cuts. Other countries have been lifting their indirect taxes but New Zealand is the only country in the world that has matched it with reductions in personal income tax that will encourage savings investment and exports. I also note that the report stated that New Zealand has the fourth-lowest GST rate in the OECD. Behind Canada Japan Switzerland Australia and Korea is New Zealand. So we have a comprehensive GST which raises sufficient revenue to allow us to significantly cut income tax rates.