Cunliffe David: Questions for Oral Answer — Questions to Ministers 
Cunliffe David: Questions for Oral Answer — Questions to Ministers 
[Volume:667;Page:14276] 
3. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
 to the  
Minister of Finance 
: How much does inflation outstrip nominal wage growth for the next 3 years to March 2013 as forecast on page 63 of the Budget 2010 Economic and Fiscal Update? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 It does not. In 2012 and 2013 as well as in 2014 the forecast the member refers to shows quite the opposite with nominal wages growing faster than inflation. In 2011 inflation is forecast to outstrip pre-tax wage growth but that is simply because the table on page 63 does not take account of the tax switch on 1 October. After-tax wages are what matter to people and the 1 October tax switch will increase people’s after-tax wages. As I said in the House on Tuesday real after-tax wages—that is after tax and after taking into account inflation—will rise by over 1 percent in the last 3 months of the year. 
Hon David Cunliffe 
: Given that his online tax calculator does not take account of his own inflation forecasts and he is now telling the House that his own Budget does not take account of his own tax switch how can he maintain that New Zealanders will be better off when his Budget is delivering higher prices not higher wages; and does this explain the widening wage gap between New Zealand and Australia which is estimated by his esteemed predecessor to have grown by 29 percent? 
Hon BILL ENGLISH 
: No but let me explain to the Minister again. He picked out— 
Hon David Cunliffe 
: Which Minister? 
Hon BILL ENGLISH 
: Let me explain to the member—well as a Minister he spent a lot of time in front of the mirror and that is what he sees when he looks in the mirror. The member sent us to page 63. When I look at the figures on page 63 I see that in the next 4 years nominal wages outstrip inflation in 3 of those years. Nominal wages outstrip inflation in 3 of those years. The 1 year where they do not is 2011 and the reason they do not is that the GST increase pushes inflation higher. But of course those figures do not take account of the income tax cut. When we take account of the income tax cut we see that in all 4 years wage increases outstrip inflation. So using the figures the member himself pointed out he is wrong. 
Hon David Cunliffe 
: Could the Minister describe in plain English whether today’s poor GDP figures which are less than one-quarter of the 0.9 percent growth that the Reserve Bank was expecting are further evidence of a stalling economy that has so far delivered only higher rents higher doctors’ fees and higher electricity and petrol prices for New Zealanders? 
Hon BILL ENGLISH 
: No. The outlook for the economy is that it is rebalancing in just the way it needs to with stronger exports and stronger savings. It is also delivering more increases in real after-tax wages in the next year than the Labour Government delivered in its last 3 or 4 years in office. The fact is New Zealanders are being more careful with their spending—probably a bit more careful than we expected—and that is one of the reasons for the number today. 
Simon Bridges 
: Is 1.2 percent growth in real after-tax wages a significant increase? 
Hon BILL ENGLISH 
: The answer is that I would not get too carried away about it but it is pretty significant growth compared with what has happened in the past. If we use the figures that are used to calculate national superannuation entitlements and have been used for the last 15 years or so we see that under the previous Labour Government from September 2003 to September 2008 real after-tax wages grew by a total of only 0.3 percent. They then did go up a bit when the tax cuts came in and wages will go up after these tax cuts come in. So the member opposite cannot claim that when Labour cut taxes wages went up but when National does it they do not go up. Of course they go up. 
Hon David Cunliffe 
: Can the Minister guarantee that supermarkets and other retailers will not raise prices by more than 2.5 percent on the back of his GST increase from next week and what enforcement powers are at his disposal to ensure that that will not occur? 
Hon BILL ENGLISH 
: If supermarkets could put up their prices any day they liked they would have already done it. I think many supermarkets will be putting their prices up by less than the GST increase. New Zealanders are being very careful in how they spend retailers are having to discount consistently to get their sales up and it is not likely that we will see a burst of excessive pricing. If there is then the member is free to complain to the Commerce Commission about it. 
Hon David Cunliffe 
: Do the retailers he was just talking about that will have to discount include Contact Energy which will increase its prices by 6 percent on 1 October; bus fares in Wellington which for some people are increasing by 100 percent; and even the humble stamp which is increasing by 20 percent? If so what has he done to ensure that none of those prices exceeds the 2.5 percent GST increase? 
Hon BILL ENGLISH 
: The unfortunate thing for the member’s theory is that in fact forecasts of inflation are dropping not rising. If the member was such an expert on controlling prices then why did the CPI under his Government increase by almost 3 percent a year? It is currently increasing by about 1.2 percent a year. Food and vegetable prices have actually dropped by 6.5 percent per year in the last 2 years compared with an increase of 4.9 percent a year under Labour. Petrol and diesel prices have dropped by an average of 4 percent a year compared with an increase of 7.2 percent a year under Labour. That is why forecasts of inflation are now dropping—because a lot of prices are dropping and real after-tax incomes are rising. 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. Further to your earlier comments I think there may still be a problem with the speaker system because I was not sure whether he said it was growth or inflation that was dropping. 
Mr SPEAKER 
: I said to the member the other day that he is a senior member in this House and he knows that that is not a point of order. One day he will stretch my patience too far.