8. Wage Rates—Average Wage and GrowthGRANT ROBERTSON (Labour—Wellington Central) to the Minister of FinanceWage Rates—Average Wage and Growth8. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Finance: Does he stand by his statement that the average wage would rise to $62000 by 2018; if so by what percentage per annum would it need to increase in the next 2 years to reach that level?Hon BILL ENGLISH (Minister of Finance): Yes I stand by a statement made at the time based on Treasury forecasts in 2013. Of course as the member is aware over time what actually happens can be different from the forecast. To answer his question wages will have to increase from their current level of $58200 by 2.6 percent per annum to reach $62000 in 2018. Treasury is now forecasting significantly lower inflation over the next couple of years and that has lowered its forecast of the increase in the average wage.Grant Robertson: Is it in fact correct that in order to meet his promise made to voters that average wages would be $62000 in 2018 they would have to increase at 3.6 percent per annum or 2.5 times the rate that his Budget says they will?Hon BILL ENGLISH: In the first case much as it might surprise the member forecasts are not guaranteed to occur. That is the first thing. The second thing is that in forecasting wages over 4 or 5 years it has turned out that inflation is much lower than was expected—less than half. In the last Budget Treasury has reforecast that the average wage will not reach $62000. It will reach a lower level mainly because of lower inflation.Jami-Lee Ross: How did forecast wage increases and inflation since 2013 compare with actual wage increases and inflation?Hon BILL ENGLISH: It is important to remember that the real wage is what determines the spending power of families and households. If we compare Treasury's forecasts for wages and inflation in 2013 with what actually happened we can see that nominal wages increased 6.4 percent. That was a bit below Treasury's forecast of 6.8 percent but total inflation since 2013 has been 1.4 percent when Treasury forecast 6 percent inflation. So the effect of that is that real wages have increased quite a lot faster than Treasury said they would because inflation has been so low.Grant Robertson: Are working people receiving a fair share of growth in the economy?Hon BILL ENGLISH: It is a matter of how you measure fairness. I have not actually looked at the long-run averages for a while but from what I can see they are not too far out of line. Of course the question of whether they get a fair share and what that means is heavily dependent on other things that are happening. For instance no one expected such low inflation for a long time. That has meant higher real wages. No one expected the lowest interest rates in 50 or 60 years or in parts of the globe the lowest interest rates in 300 years and we are not quite sure what that means for the share that households get.Grant Robertson: Does he think an increase in the real average household weekly income of 3 percent between 2008 and 2015 represents a fair share of growth in the economy for working people?Hon BILL ENGLISH: I think if you asked any particular household they would say it is not enough; they would have preferred more. I do not think there is any doubt about that. But I think they would also say they prefer not to have 10 percent interest rates like they had under Labour; not to have 5 percent inflation like they had under Labour. By and large at the moment they can see moderate but consistent wage increases ahead of them and if you look around the rest of the developed world that puts us in a fairly unique position.Grant Robertson: How is it that the Reserve Bank Treasury the Ministry of Business Innovation and Employment the ANZ bank the Auckland chamber of commerce Harcourts and now Capital Economics are all wrong when they say that suppressed wages are partly a result of immigration policy settings and why will he not take action to review those settings?Hon BILL ENGLISH: The settings are always under review. One of the fundamental tasks of a Government is deciding who comes across the border. But the most important change in those settings has been New Zealanders staying home which we regard as successful and actually I think those commentators do. It is really only the Labour Party that thinks that the turn-round from 40000 Kiwis leaving to 40000 of them staying home is some kind of problem.