5. Question No. 5—FinanceNICOLA WILLIS (Deputy Leader—National) to the Minister of FinanceQuestion No. 5—Finance5. NICOLA WILLIS (Deputy Leader—National) to the Minister of Finance: Does he agree with ANZ that Domestic inflation pressures are likely to last for a considerable time"; and if so when does he expect domestic inflation to return below 3 percent?Hon GRANT ROBERTSON (Minister of Finance): As I've said a number of times in recent months I agree that inflation pressures are persisting in New Zealand as they are in a number of countries around the world. I note that the quote the member references is in a commentary piece where the ANZ expects New Zealand's Consumers Price Index (CPI) inflation rate to peak at 7 percent. For context the average CPI inflation rate for the OECD hit an annual rate of 8.8 percent in March and 9.2 percent in April. These high global inflation rates are contributing to New Zealand's CPI inflation rate which was 6.9 percent at the latest reading for the year to March. To answer the second part of the member's question inflation is measured in New Zealand on the basis of CPI. That is forecast by the Reserve Bank to return to 3 percent in the September 2023 quarter.Nicola Willis: Does he stand by his May statement that "the short term challenge of inflation is significant"; if so how does he define the short term?Hon GRANT ROBERTSON: Well it certainly is significant and New Zealanders are facing that every time they go to the supermarket and every time they go to the petrol pump. The Reserve Bank uses an average over time measure for inflation—over the medium term—but certainly across this year we are seeing significant pressures for New Zealanders from inflation.Nicola Willis: Is he aware that according to forecasts from the Reserve Bank and the Treasury non-tradable or domestic inflation is expected to remain above 3 percent until at least 2025; and why does the Minister persist in blaming international inflation solely on global factors?Hon GRANT ROBERTSON: The member would be wise to think about what non-tradable inflation is and what domestic inflation is; we have a thing called CPI which includes tradables and non-tradables. Consistently in New Zealand's history non-tradables have exceeded tradables. We've had a period where that's been in reverse but it's now going back the other way. The non-tradable inflation is severely influenced by global factors—for example housing which is regarded as a non-tradable. One of the biggest components of the increase in housing costs in the last quarter was building materials which is caused by the supply chain constraints from overseas. Nicola Willis: Well does he agree with the Reserve Bank Governor that "scarcity of labour is the number one constraint on economic activity"; and if so is he concerned that Immigration New Zealand's failures to process visas is adding to New Zealand's cost of living crisis?Hon GRANT ROBERTSON: The Government has announced our immigration rebalance we have the borders opening in July and there is a forecast for net migration to reach 24000 by the end of next year so we will see more workers coming in. But this is a result of COVID. And members on the other side of the House might like to forget about COVID or rewrite history but the truth is that the way we closed our borders has allowed New Zealand to get through COVID better than almost any country in the world and that is both from a health and economic point of view. Nicola Willis: Has he seen the Auckland Business Chamber's recent State of Play Survey which concludes "small and medium businesses are reeling with no alternative but to raise prices to counter the acceleration and overhead costs and a crippling shortage of essential skills needed to keep business moving"; and does he accept that skills shortages are a driver of inflation?Hon GRANT ROBERTSON: We on this side of the House understand that to get through COVID small businesses had to work extremely hard and I'm very proud of the fact that we supported them. In 2020 over 60 percent of jobs were supported by the wage subsidy scheme. In 2021 47 percent of jobs were supported by the wage subsidy scheme. We are working to make sure that businesses can access the skilled staff they need and through the course of the pandemic we have trained more New Zealanders to be able to work as well. This is a global situation. New Zealand's economic performance is regarded by the likes of Moody's as being very strong compared to our peers. I'll listen to those advisers rather than the member on that matter.Rt Hon Jacinda Ardern: Can the Minister confirm that one of the reasons that New Zealand has a skills shortage is a lack of investment in skills and trade training and that under this Government we've seen a 55 percent increase in apprentices since the pandemic?Hon GRANT ROBERTSON: Yes I can and the Government's Apprenticeship Boost initiative that supported employers particularly small and medium enterprises to keep their apprentices on stands in contrast to the previous Government who after the global financial crisis abandoned apprentices to the point that many of them lost their job. I'm extremely proud of the fact that our Apprenticeship Boost initiative and our trade training initiative means that 190000 New Zealanders have benefited from trade training and free apprenticeships. Nicola Willis: Does he agree with ANZ senior economist Miles Workman that households are going backwards financially as inflation outpaces income growth and how does he explain why ANZ's consumer confidence survey shows despite the Minister's repeated claims of a strong economy most Kiwis are expecting bad financial times in the next 12 months?Hon GRANT ROBERTSON: The member can't work out what she wants because in the House last week she was criticising the Government for the fact that wages weren't keeping up with inflation. She's now concerned about the fact that wages might actually rise because the ANZ report that her primary question comes from forecasts that the largest wage rises since 2009 are on their way for New Zealander workers; 2022 is the only year in the forecast where inflation outpaces wage growth.Nicola Willis: How does the Minister explain why our nearest neighbour Australia has inflation far far lower than New Zealand?Hon GRANT ROBERTSON: The two economies are extremely different. But if I can point the member to this chart—[Holds up graph showing various countries' inflation rates]—which actually shows that New Zealand's inflation rate is in the lower quarter of the OECD and our economy and our recovery from COVID puts New Zealand in one of the strongest positions we can possibly have to support New Zealanders through this. I do note that the member is now campaigning against the wage increases that New Zealanders are expected to have next year. We will remember that.Chris Bishop: Nice try clever clogs!Hon GRANT ROBERTSON: What—what did you say?Tangi Utikere: Kia orana Mr Speaker. My question is to the Associate—SPEAKER: Sorry. I can see offence has been taken but unless someone takes a point of order I didn't hear the comment that was allegedly made. If someone feels that they should apologise and get it over with rather than me having to come back to it I'd be happy with that. Right. Question No. 6—Tangi Utikere."