1. Economy—Growth Resilience Vulnerabilities and NEETs"Hon JO GOODHEW (National—Rangitata) to the Minister of FinanceORAL QUESTIONSQUESTIONS TO MINISTERSEconomy—Growth Resilience Vulnerabilities and "NEETs"1. Hon JO GOODHEW (National—Rangitata) to the Minister of Finance: What recent reports has he received on the status of the New Zealand economy?Hon STEVEN JOYCE (Minister of Finance): This morning the International Monetary Fund (IMF) released two reports on New Zealand and the outlook in both is positive. It broadly endorsed our macro-economic and fiscal policy settings. The IMF predicts that the economy will grow over 3 percent in 2017-18. It dips slightly after that but the IMF expects it to remain strong out to 2022. I would note that Treasury's own Half Year Economic and Fiscal Update near-term growth forecasts are slightly stronger than the IMF's but whichever forecast you choose this is a positive endorsement of this Government's strong economic plan and careful management of the economy since late 2008.Hon Jo Goodhew: How are ordinary New Zealanders likely to benefit from this growth?Hon STEVEN JOYCE: Last week the household labour force survey showed that unemployment had fallen to 4.9 percent. That means there were 29000 more people in employment than there were in the previous quarter and once again our employment rate was at record highs. This is a very good achievement. I am further pleased to report that the IMF in its report expects that the unemployment rate in New Zealand will stay below 5 percent for the next 5 years. This Government has worked hard over the past 8 years to consistently keep the economy growing. That has and will continue to translate into more jobs and higher incomes for New Zealanders.Hon Jo Goodhew: How resilient is New Zealand's financial system to severe shocks?Hon STEVEN JOYCE: The IMF as part of the Financial Sector Assessment Program modelled New Zealand's residents to four key vulnerabilities: the housing market debt levels in the agricultural sector the banking system's dependence on overseas funding and our ongoing vulnerability to natural disasters. It found that New Zealand has the capacity to withstand any adverse events brought on by those risks. The Government has learnt a valuable lesson from the global financial crisis and the Canterbury earthquakes: unforeseen shocks are far easier to cope with when public debt is low. That is why we intend to reduce Government net debt to between 10 and 15 percent of GDP by 2025. Hon Jo Goodhew: What further work did the IMF recommend be undertaken to further shore up the financial system?Hon STEVEN JOYCE: Firstly the IMF acknowledged the significant progress that has been made in strengthening the financial regulatory system. It recommended that further work be undertaken in the prudential policy area. The Reserve Bank and other agencies have made good progress on a number of these matters including the proposed debt-to-income lending ratios bank capital requirements the review of the Insurance (Prudential Supervision) Act and the Ministry of Business Innovation and Employment's (MBIE's) review of the Financial Advisers Act. Our goal is to ensure that New Zealand has the capacity to absorb shocks without extra taxes and without slashing entitlements.Darroch Ball: Does the Minister agree with the Prime Minister when addressing the 20 percent increase under the National Government of young people not in employment education or training ("neets") that it is a puzzle and "the challenge is just finding them" or Paul Goldsmith who said: "They are just having some time off and having some fun."?Hon STEVEN JOYCE: Well I agree with the Prime Minister that it is a puzzle but it is an interesting puzzle because if you look at the figures it actually shows—and if the member perhaps would like to look at the figures—that the number of people in the 15 to 24-year age group since those numbers went up is actually the biggest explanation for those numbers increasing. In fact if you look at the number of young people who are unemployed and not in education as a percentage of the total cohort it is actually slightly lower than the adult population unemployment rate.Darroch Ball: How can he agree with the Prime Minister that the challenge is finding these young people when a 2016 Treasury report clearly states that data specifically targeting all school-leaver "neets" is held by the Ministry of Education and the Ministry of Social Development (MSD) and passed on to contracted youth service providers in every single region?Hon STEVEN JOYCE: Well the member did not listen to the answer to the previous supplementary question in that actually the very things that he is talking about—which the Government is doing and there are many in that area; he has just mentioned one—are actually ensuring that the rate of youth unemployment as measured by the number of people who are not in education who are unemployed is actually lower as a percentage of the total cohort than the adult population. So that is a sign that things are working but of course the puzzle we have got is to get it down to zero."