11. Wage Rates—Labour Cost IndexGRANT ROBERTSON (Labour—Wellington Central) to the Minister of FinanceWage Rates—Labour Cost Index11. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Finance: Does he think that the economy is delivering a fair share to working New Zealanders when the latest Labour Cost Index shows wage growth is at a six-year low?Hon BILL ENGLISH (Minister of Finance): The Labour Cost Index (LCI) is a very limited measure of wage changes. Another measure is the chain of changes the quarterly employment survey which measures the incomes people actually get paid. That is why it is used as the basis for calculating national superannuation—legislation requires it to be related to wages and not to the Labour Cost Index. In any case if the member looks at the Labour Cost Index what is striking in the last few periods is the way in which it has now become well ahead of the inflation rate when usually it is pretty close to the inflation rate.Grant Robertson: If the economy is growing at between 2 and 3 percent as he claims why are working people not receiving the benefits of that growth in wage increases?Hon BILL ENGLISH: The LCI is not evidence of that statement even if it was correct because the Labour Cost Index just measures changes in constant prices. What people actually get paid—that is taking into account changes in productivity promotions responsibilities shifting to a new job—is actually going up at a rate not dissimilar to the rate of growth.Grant Robertson: Is it correct that the number of workers who got a pay rise of less than 2 percent in the last year has increased by 6 percent to 67 percent of workers getting a pay rise of less than 2 percent and does he think that is fair in current economic conditions?Hon BILL ENGLISH: When we have the lowest inflation in decades—which is reflected in the lowest interest rates in I think over 50 years—then the nominal wage increases are likely to be lower. And New Zealand is fortunately one of not many economies where there are consistent but moderate real wage increases occurring. In the current worldwide episode of potential of actual and of some deflation that is actually not bad going.Grant Robertson: What comfort is it to working New Zealanders for him to invoke Consumers Price Index inflation when that does not take into account the full housing costs which New Zealanders have experienced meaning that in Auckland housing costs have risen at four times the rate of wages over the last 8 years?Hon BILL ENGLISH: The Consumers Price Index does take into account housing costs.Hon Members: No it doesn't.Hon BILL ENGLISH: It does. And as my colleague has mentioned earlier the fact that interest rates are at record lows is one of the reasons that New Zealanders are showing stronger demand for housing. But there is no doubt that in the long run poor planning such as has occurred in Auckland does have an impact on housing costs as a proportion of income and the Auckland Council has the opportunity to put that right.Grant Robertson: Does he think that working New Zealanders are getting a fair share of economic growth?Hon BILL ENGLISH: By and large yes. By and large whatever indicators you use—whether they are income inequality real wage increases or measures of employment—they are actually doing reasonably well. It does not do us any harm to compare that situation with many other developed countries where the working population in some parts is not doing so well.