2. Economic Growth—Real Disposable Income Per Capita and WagesGRANT ROBERTSON (Labour—Wellington Central) to the Minister of FinanceEconomic Growth—Real Disposable Income Per Capita and Wages2. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Finance: Is it correct that real disposable income per capita grew by 0.5 percent on average in the last year according to the latest Statistics NZ data and does he think this represents working New Zealanders getting a fair share of economic growth?Hon BILL ENGLISH (Minister of Finance): The answer to the first part of the question is yes. The answer to the second part of the question is that that does not measure whether workers are getting a fair share of economic growth. Real disposable income includes returns on capital international transfers and is subject to changes in the terms of trade. What is more important for workers is a different measure and that is wages—it is called wages. On these measures families are getting a fair share of economic growth. In the last year wages increased 2 percent compared with inflation of just 0.4 percent. In fact under this Government real take-home pay for workers is increasing at four times the rate that it did under the previous Government.Grant Robertson: How can it be fair on working New Zealanders if economic growth really is tracking along at about 3 percent that average wage rises have in fact been between 1.5 and 2 percent over the last year?Hon BILL ENGLISH: GDP is measuring something different from wages and wages are just a component of what makes up economic growth. In fact real wages have been rising. I know that the member finds that hard to believe but even coming out of a recession in 2009-10 New Zealand households have enjoyed the benefits of moderate but consistent increases in their real incomes.Grant Robertson: In light of that answer can he confirm that low wage rises are in fact a trend with average wage rises in New Zealand below 2 percent for the last 4 years?Hon BILL ENGLISH: Of course the question is: low relative to what? In fact relative to inflation wage increases now are higher than when inflation was 5 percent under the previous Government. Wages were going up at 5 percent then and so was inflation. So in fact there were zero real wage increases and now real wages are going up somewhere between 1 and 2 percent.Tim Macindoe: What trends can the Minister report on on increasing wages earned by workers and by how much are wages increasing ahead of inflation?Hon BILL ENGLISH: As I said earlier wages are a pretty good measure—in fact they are a better measure of what wages households are getting than per capita real national disposable income. Since the Government was elected in 2008 wages have increased 25 percent. Inflation over that period has been just 12 percent. Wages are set to continue rising with Treasury forecasting a further 8 percent increase over the next 4 years and for the average wage to go to around $63000. An economy that is growing around 2.5 to 3 percent with relatively low inflation will continue to deliver real wage increases.Grant Robertson: Why does he continue to deny the reality for many New Zealanders which is that they have had very modest wage increases alongside massively increased housing costs today described by the Reserve Bank Governor as excessive and a New Zealand Income Survey that shows that 28 percent of New Zealanders—the highest percentage ever—are paying more than a third of their income in housing costs?Hon BILL ENGLISH: There is a debate to be had about the proportion of household incomes that are now spent on housing. It stands to reason that if house prices are going up and some households are borrowing heavily then the proportion that they spend on housing is rising. I might point out two things: on average servicing costs for household debt are pretty similar if not a bit lower than they were 4 or 5 years ago and somewhat surprisingly recent data about rents in Auckland say that rents in Auckland are not rising.Tim Macindoe: How does New Zealand's growth in real disposable income per capita compare with Australia's?Hon BILL ENGLISH: In so far as real disposable income is a measure that shows us what is happening in an economy growth in New Zealand's real disposable income has exceeded that of Australia since 2012. If we look at growth in real disposable incomes we can see the effects of Australia's mining boom between 2010 and 2013 and New Zealand's dairy boom between 2012 and 2015. But in fact on average New Zealand's has risen faster.Grant Robertson: Will he listen to the economic commentator who said Strong GDP growth will make little difference to average earners." and get on with addressing the housing costs that New Zealanders are facing and review the immigration settings which are holding down wage growth or has he stopped listening to himself?Hon BILL ENGLISH: It would certainly be more intellectually uplifting than listening to the member. Occasionally I do have to listen to myself because sometimes other people do not always agree. But the fact is that underlying the member's anxiety is the data that consistently shows New Zealand has an economy growing at 2.5 to 3 percent—in fact currently it is at 3.5 percent. That puts it in the top two or three of the developed world for growth rates right now. Although the member is worried that that is not enough the Government is certainly not complacent and we have a programme of ongoing microeconomic reform to underpin further growth.Grant Robertson: Does he not get it that the problem here is that working New Zealanders are not getting a fair share of that growth especially when they are facing the kinds of housing cost increases that they are and when debt-to-income ratios in households are the highest that they have ever been and why will he not get on the side of working New Zealanders and help lift their wages?Hon BILL ENGLISH: Where I agree with the member is that among any number of measures of economic growth what actually happens to household wages is a very important one. The fact is by historical standards our households are seeing moderate and consistent increases. There is no data the member has referred to today that even measures whether it is the distribution of income across the economy or whether it is fair. The member is just randomly picking statistics and trying to tell us that that tells us what is happening to workers. Tim Macindoe: How does New Zealand's growth in GDP per capita under this Government compare with growth in other OECD countries?Hon BILL ENGLISH: This is yet another measure along with measures of real wages that shows progress in the economy. The OECD data shows that since 2008 growth in New Zealand's GDP per capita is the seventh fastest among 35 countries. That is higher than GDP per capita growth in Australia the US the UK Germany Japan and the OECD average. By comparison—just to pick a random period—from 1999 to 2008 instead of being seventh fastest among 35 OECD countries New Zealand over that period was 20th fastest."