Parker David: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeParker David: Questions for Oral Answer — Questions to Ministers[Sitting date: 04 March 2014. Volume:696;Page:16241. Text is incorporated into the Bound Volume.]3.Hon DAVID PARKER (Deputy Leader—Labour) to theMinister of Finance: When did he first become aware that Treasury had miscalculated estimates of household disposable income?Hon BILL ENGLISH (Minister of Finance): For the benefit of the member I might take slightly longer than usual to outline the sequence of events. My office received the first written advice on 11 December that Treasury and Statistics New Zealand had made an error in the data. Treasury said that although the absolute measure of child poverty using the OECD’s measure of 60 percent of the median income would be around 2 percentage points higher the high-level trends and findings remained the same. Therefore generic or high-level comments made by Ministers about trends in inequality would be consistent with both the previous and revised data. On 12 December I received an aide-mémoire from Treasury that confirmed high-level trends and findings of the Ministry of Social Development’s household incomes report and that they would remain broadly valid. Ministers asked officials to look carefully at howthe error had occurred and investigate its wider implications on policy advice including on the ministry’s household income report. On 16 January Treasury advised my office it had discovered another error relating to data for 2007 and 2008. Ministers again instructed officials to recheck the data and its implications. Officials did that and Treasury completed an internal review including review by a third party. After officials and Ministers were satisfied they had all the correct data the error was publicly communicated by Treasury and Statistics New Zealand on 27 February. It is important to note that no one has missed out on entitlements to benefits Working for Families or targeted support for vulnerable families and if anything the error compounds the Government’s strong focus on supporting vulnerable families and vulnerable children.Hon David Parker: When did he inform the Prime Minister that Treasury had miscalculated household disposable income by overstating incomes of 300000 low and middle income families and can he explain why the Prime Minister kept that secret while questioning the motives of the Salvation Army report on poverty in New Zealand?Hon BILL ENGLISH: I expect the Prime Minister was advised some time around the middle of December. There were two things that had to happen. One was that we sought reassurance about whether the data error made any difference to the broad conclusion that income inequality is pretty flat in New Zealand—that is it is not getting worse; it is getting vaguely better. The answer to that was yes. Secondly we wanted to make sure that officials ensured the data was accurate in every respect before new data was published and it took them about 6 weeks to do that.Hon David Parker: Why did he hide this $1.2 billion overstatement of low incomes for more than 2 months and fail to disclose the error when answering questions in this House on 29 and 30 January about measures of income inequality?Hon BILL ENGLISH: First of all we did not hide it. Officials were asked to go and investigate how the error occurred and to ensure that there were no other errors. It turned out that they found other errors after they were sent back by Ministers to recheck the data. Secondly the data does not undermine the conclusion that in New Zealand income inequality has been roughly flat for the last 3 or 4 years and is getting slightly better. The assertion by the Labour Party that the rich are getting richer and the poor are getting poorer is wrong.Hon David Parker: I raise a point of order Mr Speaker. There were two parts to that supplementary question. The Minister in reply said “Secondly” as if he was responding to the second part which was about why he did not fess up on 29 and 30 January. But he did not answer that part of the question.Mr SPEAKER: And the member knows full well that if he asks two supplementary questions the member can choose to answer one of those and he did.Hon Kate Wilkinson: What issues affecting households with low disposable incomes were inherited by this Government in 2008?Hon BILL ENGLISH: We inherited rising social spending and declining social outcomes. Shortly before the change of Government in 2008 the Salvation Army produced the same report as the one it produced earlier this year. Its findings were that more children appeared to be at risk of harm more youths were engaged in crime violent crime was up more people were in jail and Child Youth and Family referrals were rising. The Salvation Army said at the time that it was disappointed that despite significant increases in Government spending the social problems were getting worse. So we listened to its advice. We have not increased spending and a number of these social problems are now improving.Hon David Parker: Given this billion-dollar error which occurred in his own department does he now concede that both income inequality and the number of children living in poverty are worse than he previously claimed?Hon BILL ENGLISH: No I do not. The picture is this: the deep recession into which Labour pushed New Zealand followed by the global financial crisis had a bigger impact than people thought. Since then income inequality has not deteriorated; in fact it has slightly improved.Hon Kate Wilkinson: How is the Government delivering better outcomes for households on limited disposable incomes?Hon BILL ENGLISH: The best contribution a Government can make is to manage an economy in a way that supports more jobs and higher incomes. So for instance since 2008 median weekly earnings have increased by more than 15 percent and after-tax incomes have increased by 25 percent. [Interruption] Well for the member’s benefit if we use the measures that the Opposition is quoting the medianequivalised household disposable income which is the benchmark that those members are using for poverty has gone up by 6.9 percent after inflation. So all the children to whom the member refers are in households where the income has gone up and their relationship to the median income is about the same. Rising incomes are lifting more families out of poverty.Rt Hon Winston Peters: Can the Minister remember that on coming into power in 2008 the minimum wage had just been raised from $9 to $12 per hour and can he remember which party brought about that dramatic attack on income inequality and so can be trusted in the future on this matter?Hon BILL ENGLISH: My memory is a bit vague but I think it might have been New Zealand First. Actually New Zealand First has turned out to be more effective than the whole Labour Party on most of these issues in the last 6 years.Hon David Parker: Does he think that his $1 billion stuff-up is no big deal because it affects only children in child poverty and low to middle income families and how does he think the Government’s cronies would have reacted if they had been short-changed by over $1 billion from their corporate welfare payments?Hon BILL ENGLISH: The member clearly does not understand the measure if he thinks that families have been “short-changed”. A data error was made deep in the bowels of Statistics New Zealand by a statutorily independent agency so it is nothing to do with the Government. Secondly we have made sure that that miscalculation has made no difference to any entitlement of any New Zealand family or child and that is the case. No New Zealand family or child is worse off because of that miscalculation.