Wilkinson Kate: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeWilkinson Kate: Questions for Oral Answer — Questions to Ministers[Sitting date: 17 June 2014. Volume:699;Page:18524. Text is incorporated into the Bound Volume.]3.Hon KATE WILKINSON (National—Waimakariri)to the Minister of Finance: What recent reports has he received about the outlook for the New Zealand economy?Hon BILL ENGLISH (Minister of Finance):The Reserve Bank last week issued its Monetary Policy Statement for June. It forecast that the economy will expand by around 4 percent in the year to June 2014 with growth increasingly broad-based and increasingly self-sustaining. It also forecast that inflation is expected to remain near the mid-point of its 1 to 3 percent target. However inflationary pressures are expected to increase. It notes that despite recent falls in dairy prices export prices remain high by historical standards. These factors together with an extended period of relatively low interest rates are supporting what the Reserve Bank calls robust growth in incomes and in demand.Hon Kate Wilkinson: In releasing its latest forecasts what key assumptions did the Reserve Bank make about the economy over the next few years?Hon BILL ENGLISH: The Reserve Bank says its outlook for the next few years depends on several key assumptions. It says prices for New Zealand’s exports are expected to fall further from current levels before they stabilise at levels that will remain high by historical standards; the trade-weighted exchange rate is expected to fall gradually over the next 3 years; annual net migration is assumed to peak at the end of 2014 before easing at a similar rate to the last migration cycle in the early 2000s; and annual house price inflation is projected to ease from its peak of over 10 percent late last year to under 1 percent within the next 4 years.Hon Kate Wilkinson: What reports has the Minister received about the Government’s financial position as it moves to return its books to surplus next year in line with its wider economic programme?Hon BILL ENGLISH: Treasury last week released the Government’s financial statements for the 10 months to 30 April. They showed that the operating deficit was $1.37 billion for the 10 months—about $148 million smaller than forecast in the Budget. Core Crown revenue was $12 million below forecast while core Crown spending was $90 million below forecast. The results confirm that the economy is on track to meet Treasury’s forecasts which include a modest Budget surplus in this next financial year.Hon Kate Wilkinson: In setting a track back to fiscal surplus next year how has the Government ensured the income tax and income support systems are fair and continue to help those households most in need?Hon BILL ENGLISH: A combination of decisions over the income tax and support systems provides significant income redistribution from higher-income households to lower-income households. Latest estimates show that households earning over $150000—that is the top 15 percent of households by income—will pay 49 percent of income tax in this year. But when benefit payments Working for Families paid parental leave and accommodation support are taken into account these 15 percent of households will pay 74 percent of net income tax and that is excluding New Zealand superannuation. Households under $60000 a year which is just under half of all households are expected to pay 9 percent of income tax but when we take into account their income support payments they pay no net income tax at all. The $2.5 billion of income tax expected to be paid by households earning under $60000 a year will be more than offset by the $7.3 billion they will receive in income support.