4. Question No. 4—FinanceNICOLA WILLIS (Deputy Leader—National) to the Minister of FinanceQuestion No. 4—Finance4. NICOLA WILLIS (Deputy Leader—National) to the Minister of Finance: Does he agree with Westpac that a much higher level of interest rates will be needed to bring inflation under control" and what impact if any have Government spending decisions had on domestic inflation?Hon GRANT ROBERTSON (Minister of Finance): As the member will appreciate as has been the case for finance Ministers since 1989 it is not appropriate for me to provide opinions on what the correct level of interest rates might be for the Reserve Bank to meet its price stability objective. I would note that in the latest Monetary Policy Statement the Reserve Bank indicated a forward track that did see increasing interest rates as they seek to return to the 1 to 3 percent inflation band. To answer the second part of the member's question the Government has taken a number of actions to take pressure off Consumers Price Index (CPI) inflation. For example when we announced spending to reduce fuel excise duty and road-user charge economists estimated that this would take 0.5 percentage points off the domestic headline CPI. I further note the Treasury's commentary in the Budget Economic and Fiscal Update: "the fiscal impulse is forecast to turn negative … in 2022/23 and remain so throughout the remainder of the forecast period. This indicates that as temporary COVID-19-related fiscal support is withdrawn year-on-year and the fiscal balance heads into surplus the Government is forecast to contribute less to aggregate demand each year than in the preceding year."Nicola Willis: Is it the case that a borrower who fixed their mortgage at 2.7 percent in 2020 will now face re-fixing their rate at over 6 percent meaning that someone with a $500000 mortgage will need to find a whopping $310 more per week to service their mortgage under Labour?Hon GRANT ROBERTSON: As we've discussed before when the member has raised these kinds of examples it would very much depend upon the specific circumstances of that household. What we do know is that many New Zealanders will be facing increased mortgage payments over the coming year. That's why it is a good thing that average hourly earnings are tracking just above inflation at the moment. That's why it's a good thing that we've increased the minimum wage. That's why it's a good thing that we've provided additional support for low and middle income households—things that the National Party has opposed.Nicola Willis: Does he recall receiving advice from Treasury that extra fiscal stimulus would cause the official cash rate to rise by an additional 30 basis points for every percentage of GDP and if so what responsibility does he take for the contributions that stimulatory fiscal policy—big spending—has made to New Zealanders' interest rates?Hon GRANT ROBERTSON: The responsibility I take is having been the Minister of Finance while we have helped New Zealanders get through COVID. That indeed did require a significant fiscal response—a fiscal response that at various times the National Party either supported or didn't support. But I would note that even as late as 2021 when there were examples of concern being raised about where interest rates might go the National Party was continuing to propose more spending in certain areas. So the member can't have it both ways. Nicola Willis: Does he recall his officials specifically advising that the cost of living payment would add to inflationary pressures and if so what advice has he had about how much higher inflation and therefore interest rates is as a result of his sending money to backpackers in Europe?Hon GRANT ROBERTSON: What I do recall is the Treasury saying that if a payment was made that was temporary and targeted that would have less of an impact on inflation than for example across-the-board tax cuts that go disproportionately to the wealthiest New Zealanders. We have stepped up continually through the period of COVID to support New Zealand households. The member might want to rewrite history now and claim that we didn't need to do that the wage subsidy wasn't needed we didn't need to step in to support people on $70000 a year—she used to say those things in the House. The Government has stepped up to support New Zealanders and I am proud of our record in doing so.Nicola Willis: Has he failed to deliver on his promise to tilt the balance towards first-home buyers when analysis by interest.co.nz published today shows that housing affordability for first-home buyers is the worst it has been since reports began in 2004?Hon GRANT ROBERTSON: What I do know we have done is tilt the balance so that there is now a higher percentage of first-home buyers in the market than we have seen from when that statement was made.Nicola Willis: What does he say to Maddie a young first-home buyer in Wellington who is bracing for an interest rate increase of over $25000 a year when she re-fixes next year and does he take responsibility for his actions which have further pushed up interest rates?Hon GRANT ROBERTSON: As we have said many times in this House there are a number of households in New Zealand who are going to find 2023 tough. That's the reason why as a Government we have stepped up to support low and middle income households to get through this period of time. The member continues to misrepresent the position of what it is that causes inflation. If the member is really really serious about wanting to debate these issues it shouldn't be on the basis of taking out small amounts of spending that she may or may not agree with and claiming that somehow or other they are exacerbating inflation. If Government spending was to truly exacerbate inflation it would need to be something like across-the-board tax cuts that were going to the wealthiest New Zealanders or the member might like us to stop our State house building programme and explain to Mr Bishop how that works or stop our spending in the health sector and explain to Dr Reti how that works. It's not quite as simple as the member thinks it is."