Yang Jian: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeYang Jian: Oral Questions — Questions to Ministers[Sitting date: 12 March 2015. Volume:703;Page:2203. Text is incorporated into the Bound Volume.]3.Dr JIAN YANG (National) to the Minister of Finance: What recent reports has he received about the growth outlook for the New Zealand economy?Hon BILL ENGLISH (Minister of Finance): Today the Reserve Bank issued its Monetary Policy Statement for March with updated forecasts that the economy will grow by 3 to 4 percent over each of the next 2 years after estimated growth of over 3 percent in 2014. The bank says that the domestic economy remains strong supported by growth in employment and construction activity. Business investment and household income and consumption are moderately strong supported by low interest rates high net migration rising house prices and the flow-on effects of high commodity export prices in the last dairy season. As the Reserve Bank pointed out of course there are some risks to this scenario over the next couple of years. It also forecast that annual inflation to March 2015 would be zero which I think is unprecedented and revised down its estimates of increases in the cost of living to 1.3 percent for the year to March 2016.Dr Jian Yang: What does the Reserve Bank see as the main drivers of inflation and the economic outlook?Hon BILL ENGLISH: The Reserve Bank says that headline inflation forecasts reflect a high exchange rate weak global inflation and falling oil prices so effectively New Zealand is importing deflation from offshore. Domestic or non-tradable inflation is higher at 2.4 percent but it does remain well below the long-term average. Oil prices are expected to remain at their current level over the next 2 years moderating tradables inflation and boosting incomes and economic activity. The Reserve Bank says the outlook for the economy depends on these four factors: oil prices dairy prices and farmers’ spending domestic capacity pressures and the housing market.Dr Jian Yang: What is the role of housing in the outlook from the Reserve Bank?Hon BILL ENGLISH: The Reserve Bank seems to spend a lot of time focusing on the housing market because in an economy where most things seem to be pointing towards sustained economic growth for some time which will lift incomes and households across the country the housing market in Auckland is one obvious imbalance. Projected building work continues to rise with the Canterbury rebuild and building work continues to rise in response to the housing shortage in Auckland. House price inflation is being driven in part by net migration and by falling interest rates but also the Reserve Bank agrees with the Government’s view that shortage of supply is a critical driver of house price increases in Auckland.Dr Jian Yang: What steps is the Government taking to improve housing supply and take pressure off interest rates?Hon BILL ENGLISH: Of course the critical thing about housing supply to understand is that it is councils that make the decisions. So the Government is working closely with councils to create special housing areas; we are reforming the Resource Management Act which I know will have support from the Opposition members who are keen to see the supply of housing expanded; and we are spending $1.9 billion a year on accommodation support. On 1 April the Government’s KiwiSaver HomeStart programme will get under way and that will also encourage new supply of housing.