Kuriger Barbara: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeKuriger Barbara: Oral Questions — Questions to Ministers[Sitting date: 12 November 2015. Volume:710;Page:7966. Text is incorporated into the Bound Volume.]2.BARBARA KURIGER (National—Taranaki - King Country) to the Minister of Finance: What reports has he received on the stability of New Zealand’s financial system?Hon BILL ENGLISH (Minister of Finance): Yesterday the Reserve Bank released its 6-monthly Financial Stability Report which found that our financial system continues to perform well despite a deterioration in the outlook for global financial stability. The banking system is maintaining sound levels of capital above minimum requirements and growth in bank deposits has kept pace with growth in lending. Lower interest rates—in fact the lowest interest rates in 50 years—are allowing borrowers to repay their debts faster. Our net external liabilities have declined from a peak of 85 percent of GDP down to 62 percent supported by higher household savings. The softening economy may mean that these numbers worsen a bit in the short to medium term but I would expect to see continued improvement in the long term.Barbara Kuriger: What does the Reserve Bank have to say about risks to New Zealand’s financial stability?Hon BILL ENGLISH: They point out risks that I think the House is pretty familiar with: the low prices in the dairy sector which mean there are risks for that part of the dairy sector that has high debt; and also their view that Auckland house price increases are too high and are not sustainable. That is why we are working closely with the Auckland Council on a wide range of measures to improve supply and improve the planning system. In respect of housing the Government has introduced tax measures such as the brightline test the Reserve Bank has introduced the investor loan-to-value ratio restrictions and on 1 April next year there will be a withholding tax payable by foreign owners of houses when they sell those houses.Barbara Kuriger: What recent data has he seen on Auckland housing?Hon BILL ENGLISH: The most important is the annual number of building consents which in Auckland is currently running at the highest in 10 years at 8700. It needs to keep growing to keep up with growth in population and growing demand. There is some recent anecdotal evidence that the housing market in Auckland is slowing down but we would need to see numbers for another 6 months in order to see whether it is a long-lasting effect. The recent National Construction Pipeline report projected an extra 80000 homes over the next 6 years.Barbara Kuriger: What other reports has he seen on New Zealand’s economic resilience?Hon BILL ENGLISH: The International Monetary Fund published its concluding statement on New Zealand this week. It pointed out that the flexible exchange rate is an important economic buffer so the drop in the exchange rate will help our economy adjust and grow again. Farmers are employing a range of measures to adapt to lower dairy prices. Finally it pointed out that the banks are well capitalised so they can handle a period of lower dairy prices or a slow-down in house prices.