2. Economy—Monetary Policy Statement August 2016ALASTAIR SCOTT (National—Wairarapa) to the Minister of FinanceEconomy—Monetary Policy Statement August 20162. ALASTAIR SCOTT (National—Wairarapa) to the Minister of Finance: What reports has he received on the outlook for the New Zealand economy?Hon BILL ENGLISH (Minister of Finance): Earlier today the Reserve Bank released its Monetary Policy Statement and cut the official cash rate by 25 basis points to 2 percent. The official cash rate is now the lowest it has been in its history. The Reserve Bank forecast growth to accelerate from 2.5 percent this year to 3.4 percent in each of the next 2 years. The outlook is broadly similar to its June statement but stronger growth is now being forecast. The drivers of this growth include stimulatory monetary conditions higher terms of trade strong construction activity and strong tourist spending. This confirms that New Zealand remains one of the better-performing developed economies. Alastair Scott: In light of the lift in forecast economic growth over the next 3 years what is the Reserve Bank's outlook for the labour market?Hon BILL ENGLISH: The Reserve Bank is forecasting an increase of about 1 percent more growth in the economy over the next 3 years compared with what it thought 3 months ago. It is forecasting that unemployment is going to continue falling from 5.2 percent this year to 4.5 percent by 2019 and that job numbers will increase by more than 2 percent on average over the next 2 years. A significant component of that of course will be the construction boom where thousands of houses will be built over the next 2 or 3 years. These forecasts are in line with Treasury's forecast for the labour market and show an economy that is delivering more jobs lower unemployment and real increases in incomes when in many developed countries that is not happening. Alastair Scott: What risks does the Reserve Bank see in the economic outlook?Hon BILL ENGLISH: It points out that global growth is below trend growth—that is below the normal average—even though there are unprecedented levels of monetary stimulus from central banks. It points out that significant surplus capacity remains across many economies supressing global inflation. Weak global conditions and low interest rates internationally are placing upward pressure on the New Zealand dollar and the Reserve Bank has signalled continuing concern about the exchange rate being too high. Faced with these risks the Government is continuing to focus on building New Zealand's competitiveness giving businesses the confidence to invest and create jobs and lift incomes.Alastair Scott: What steps is the Government taking to support growth in jobs wages and investment?Hon BILL ENGLISH: Although the Reserve Bank has presented a fairly positive outlook for the New Zealand economy this cannot be taken for granted because forecasts are just forecasts. That is why we have a wide-ranging programme to ensure that the economy remains resilient and continues to grow. For instance billions of dollars are being invested in public infrastructure including a roll-out of ultra-fast broadband and there has been significant new investment in science and innovation as well as the Government focusing on getting higher productivity and better results in the public sector which represents about a quarter of the economy.