7. Business Innovation and Employment Ministry—Housing Affordability Measure ReliabilityPHIL TWYFORD (Labour—Te Atatū) to the Minister for Building and ConstructionBusiness Innovation and Employment Ministry—Housing Affordability Measure Reliability7. PHIL TWYFORD (Labour—Te Atatū) to the Minister for Building and Construction: Why did his ministry release the Housing Affordability Measure two days after the Reserve Bank advised that it was based on the wrong mortgage interest rate?Hon MICHAEL WOODHOUSE (Minister of Immigration) on behalf of the Minister for Building and Construction: The Minister had no involvement in the development of the Housing Affordability Measure (HAM). Officials advised that there were sound reasons for choosing the interest rate utilised in the measure and that they are satisfied with the quality of the series.Phil Twyford: Is it not the truth that he allowed his officials to deliberately release information that the Reserve Bank had said was inappropriate based on the mortgage interest rate because he was so desperate to make out that housing is more affordable than it actually is?Hon MICHAEL WOODHOUSE: Putting aside the slight on Ministry of Business Innovation and Employment (MBIE) officials actually that is not what the Reserve Bank said. It did not say the measure was wrong and it did not say that it was the only one that could be used. There was an interesting exchange whereupon the Ministry of Business Innovation and Employment staff set out their reasons for using that rate in very clear terms and I think that is smart thinking.Phil Twyford: Can the Minister confirm that since the Reserve Bank publicly confirmed its advice 2 days before the measure was released it was an inappropriate interest rate to be used and that MBIE officials subsequently acknowledged it was the wrong interest rate said it was an experimental series and that it would change the interest rate for the next lot of information that was released under the measure?Hon MICHAEL WOODHOUSE: No I cannot confirm that. Officials advised me there was no error in the HAM interest rates so the HAM shows reliable results. There were two main reasons why the effective rate was used: firstly that rate series goes back further than the new rate series does and it also takes into account a mix of floating and fixed rates which provides a more reliable and predictable measure.Phil Twyford: It's not the rate that mortgage customers face when they walk into the bank.Hon MICHAEL WOODHOUSE: That is well—[Interruption]Mr SPEAKER: Order! [Interruption] Order! No; the member will resume his seat. Question time is not an opportunity to have a conversation. If you want to have that conversation—if collegiality has descended to that level—go to the lobbies and have a yarn any time you like.Phil Twyford: How did he manage to stuff up a project that was 5 years in the making by using the wrong interest rate data that was 2 years out of date and by downplaying the difficulty of saving a deposit when house prices are so high on his watch?Hon MICHAEL WOODHOUSE: He did no such thing. The series was developed by MBIE. It is an experimental series that it stands by very strongly.Phil Twyford: When he uses the correct interest rate recommended by the Reserve Bank which is typically 1 percent more than the rate he used in the Housing Affordability Measure does he think it will make the 80 percent of renters who cannot afford mortgage payments on a new home in their area without falling into financial hardship more or less happy?Hon MICHAEL WOODHOUSE: The member is incorrect in his assessment of the difference between the effective rate and the new fixed and floating rates. In June 2015 there was a 0.3 percentage point difference between the 5-year rate and a 0.6 percent difference between the new floating rate; not the 1 percent that that member says.