Yang Jian: Questions for Oral Answer — Questions to Ministers 
Text is incorporated into the Bound Volume 
Yang Jian: Questions for Oral Answer — Questions to Ministers 
[Sitting date: 14 March 2013. Volume:688;Page:8550. Text is incorporated into the Bound Volume.] 
2. 
Dr JIAN YANG (National) 
 to the  
Minister of Finance 
: What reports has he received on the outlook for the economy? 
Hon STEVEN JOYCE (Associate Minister of Finance) 
 on behalf of the Minister of Finance: The Reserve Bank today issued its latest Monetary Policy Statement for March. It kept the official cash rate unchanged at 2.5 percent. The Reserve Bank also slightly revised up its outlook for the economy from its projections in the December Monetary Policy Statement. However it did note that the recovery remained somewhat uneven with demand and output expanding and consumer confidence increasing. On the other hand it noted that a continued drought would have a negative impact on economic output. Overall the central bank now expects annual average real GDP growth to rise from just over 2 percent in the year to March this year to around 3 percent in 2014 and 2015 before easing back a little in 2016. 
Dr Jian Yang 
: What are some of the factors driving the Reserve Bank’s forecasts for growth over the next few years? 
Hon STEVEN JOYCE 
: The Reserve Bank notes that reconstruction in Canterbury is picking up and will be a key driver of economic activity over the forecast period. Residential investment in other parts of New Zealand is also expected to increase as a result of mortgage interest rates remaining low. The Reserve Bank also expects export growth to be slightly stronger in the latter part of the 4-year forecast period than it projected in December. It notes that the outlook for growth among our trading partners has improved since that December statement. The bank’s projection for private consumption is broadly in line with its December Monetary Policy Statement forecast. It expects household savings to pick up to 1.2 percent of total disposable income by 2016 from a negative 0.1 percent in 2012. 
Dr Jian Yang 
: What are the Reserve Bank’s latest forecasts for the cost of living over the next few years? 
Hon STEVEN JOYCE 
: The Reserve Bank expects consumer and price inflation to remain subdued through the rest of 2013 before gradually rising to the mid-point of its 1 to 3 percent target band. Headline annual inflation is projected to be 0.9 percent 1.4 percent and 1.8 percent in the March years to 2013 2014 and 2015 respectively. These forecasts of low inflation are good for New Zealand households particularly those on lower or fixed incomes. In addition average floating home mortgage interest rates are now around half what they were 5 years ago in 2008. For a family with a $200000 mortgage that is saving them around $200 a week. 
Dr Jian Yang 
: What alternative economic and monetary policy approaches would put at risk the low inflation and low interest rates currently enjoyed by New Zealanders? 
Hon STEVEN JOYCE 
: Well there are a number of alternative policies that would put the substantial benefits of current low inflation and low interest rates at risk and that would of course cost New Zealand households dearly—for example trying to artificially and substantially devalue the exchange rate or going soft on inflation or for example opposing the Government’s share offer programme and instead borrowing billions of dollars more to pay for priority assets like schools and hospitals or for example just pulling out the photocopier and printing more money. All of those things would send interest rates and inflation through the roof directly affecting New Zealand households and families. They are of course the cornerstones of the Labour-Green opposition— 
Mr SPEAKER 
: Order! 
Hon David Parker 
: How can the Minister of Finance claim to be a responsible manager of the economy when as shareholding Minister of Solid Energy he so clearly mismanaged that at the cost of many many jobs and many tens if not hundreds of millions of dollars just a year after he had the debacle of the loss of hundreds of millions of dollars extra through the mismanagement of the Crown Retail Deposit Guarantee Scheme where they did not even look as to whether there was interest and increased loans on the back of taxpayers following the grant of the guarantee? 
Hon STEVEN JOYCE 
: The member has an interesting take on history given that it was the former Labour Government in 2008 that set up the deposit guarantee scheme with the support of the Opposition at the time because of the difficulties of it. Of course that deposit guarantee scheme has come at some cost to the country as the member points out but has actually helped underpin the New Zealand financial markets which is one of the key reasons why we have come through the global financial crisis alongside Australia in better shape than just about every other OECD country. Once again we learn that the member has very little understanding of finance whatsoever.