3. Question No. 3—FinanceNICOLA WILLIS (Deputy Leader—National) to the Minister of FinanceQuestion No. 3—Finance3. NICOLA WILLIS (Deputy Leader—National) to the Minister of Finance: Does the Minister agree with Treasury forecasts showing inflation will outstrip New Zealanders' wages this year and does he agree with Infometrics Chief Forecaster Gareth Kiernan that The high cost of living and unaffordable housing threatens to create a brain drain over the next two years"?Hon GRANT ROBERTSON (Minister of Finance): As I said in the House yesterday I agree that those are Treasury's forecasts for the June 2022 year. As I also said yesterday this is the only year in the forecast period in which inflation outstrips wages. As to the second part of the question the rising cost of living is a global issue. I note that this week US inflation hit 8.5 percent while the UK saw its inflation rate rise to 7 percent. We do recognise that many New Zealand families are finding it tough as Omicron the resulting supply chain constraints Russia's invasion of Ukraine and the general effect of the pandemic drive up prices around the world. That's why we have acted to ease the impact on households for example through the cutting of the fuel excise duty and also the big range of measures we brought in to support those on low and middle incomes. This will make a far greater difference to New Zealanders than the Opposition's tired response of tax cuts for the most wealthy. In terms of Mr Kiernan's statements I would note that the Reserve Bank is expecting net migration to increase to 24000 over the next couple of years.Nicola Willis: Is the Minister aware of a range of forecasts which show inflation in New Zealand forecast to be much higher than inflation in Australia with ANZ forecasting we will hit 7.4 percent while Australia will remain below 5 percent; and if he has seen those forecasts how does he explain them?Hon GRANT ROBERTSON: Economic forecasts range for what will happen both in New Zealand and Australia and around the world. What we do know is that the New Zealand economy is in a strong position to be able to manage the challenges of 2022 with low debt compared to other countries in the world a quicker return to surplus than many other countries in the world a lower unemployment rate than many other countries in the world and annual average growth over 5 percent.Nicola Willis: Does the Minister share the view of a growing group of economists that the soaring cost of living record low consumer confidence and plummeting business confidence means New Zealanders can expect their economic fortunes to worsen in the next 12 months; and if not why not?Hon GRANT ROBERTSON: I've said a number of times in this House I understand that 2022 will be a challenging year for many New Zealand households. That's the reason why this Government has invested particularly in low and middle income families to make sure that they do have the resources that they need. We also understand that this is a global issue and when global organisations like the IMF and Standard & Poor's congratulate New Zealanders on how they have made it through the pandemic and the economic performance of New Zealand that is something that we can at least be pleased about in this challenging period of time.David Seymour: Does the Minister stand by his response to my question in the annual review debate whether the Government had overdone fiscal and monetary stimulus leading to excessive inflation "It's always easier in hindsight."?Hon GRANT ROBERTSON: No doubt many issues are easier to deal with in hindsight. What I am proud of is that this Government stepped in to support New Zealand businesses and households to make sure that people stayed in work so that we've got 3.2 percent unemployment. I'm pleased that we stepped up to support businesses through things like the Small Business Cashflow Scheme the Resurgence Support Payment the wage subsidy. These were things that helped New Zealanders get through the pandemic and at the other end of it we have an economy that is recognised by the likes of the IMF as doing well.Nicola Willis: Has he seen analysis by Infometrics chief forecaster Gareth Kiernan stating that "Despite there being little rationale for further spending increases growth in government consumption is still accelerating"; and can the Minister outline what specific steps he has taken to ensure all Government agencies are ensuring maximum value for expenditure?Hon GRANT ROBERTSON: In answer to the first part of the question it is worth reminding the member that as a percentage of GDP the spending that the Government has been doing over the last couple of years is very comparable with what the previous National Government did off the back of the global financial crisis. In fact in 2009 as a percentage of GDP National's spending was 34.7 percent; for Labour in 2020 it was 34.3 percent. For National in 2010 it was 33.8 percent of GDP and for Labour it was 31.7 percent of GDP. Governments from time to time face crises like this. It is important that we use the balance sheet of the Government to support New Zealand businesses and households.Nicola Willis: Does the Minister continue to believe in the face of the cost of living crisis and accelerating inflation that it is prudent for him to add more spending to this year's Budget than any finance Minister in the history of New Zealand?Hon GRANT ROBERTSON: The member needs to sort out her position because she has said on radio this week I believe that National would spend the same amount as the Labour Party. So she's criticising her own Budget proposal which is to spend the same amount but the one difference is that side of the House would do it through untargeted tax cuts; on this side of the House we are going to invest it in the public services that New Zealanders need.Nicola Willis: Does the Minister consider it untargeted to ensure that middle-income New Zealanders squeezed by a growing cost of living and ineligible for Working for Families will get some tax relief in his Budget?Hon GRANT ROBERTSON: What I consider untargeted is that people earning $180000 a year would benefit the most from the member's proposals whilst those on the minimum wage would get two bucks a week. The National Party could start by actually supporting some of the things that lift wages like the minimum wage increase like the 1 April changes that this Government proposed.Nicola Willis: Does he agree with Westpac that "The March quarter inflation result is set to be another monster." and what is the Minister's plan to support the Reserve Bank's efforts to put a lid on the cost of living crisis?Hon GRANT ROBERTSON: As all commentators are saying inflation in 2022 is a challenge right around the world and I look forward to the member lecturing Boris Johnson and Joe Biden about their total failure to control inflation. This is a global issue. On this side of the House we'll continue to balance our fiscal policy to make sure we invest in health and in education and in housing and in transport—all the areas that the member's party ignored for nine years."