Korako Nuk: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeKorako Nuk: Oral Questions — Questions to Ministers[Sitting date: 16 March 2016. Volume:712;Page:9789. Text is incorporated into the Bound Volume.]3.NUK KORAKO (National) to the Minister of Finance: What steps is the Government taking to help keep interest rates lower for longer?Hon BILL ENGLISH (Minister of Finance): One contribution the Government does make to keeping interest rates lower for longer is ongoing fiscal discipline. Over the last seven Budgets the annual new cost of initiatives has averaged around $600 million per year compared with almost $3 billion of new spending in each of the seven Budgets before this Government came to office. Around a third of new spending is being financed through careful reprioritisation and savings. This means the Government has less pressure to borrow money and this helps to provide one influence on lower interest rates. Combined with an outlook for ongoing moderate economic growth low interest rates are supporting business investment and employment.Nuk Korako: How are lower interest rates rising wages and low inflation putting more money and more spending power in the pockets of New Zealand families?Hon BILL ENGLISH: Just by way of example the latest data from the Reserve Bank shows that the average interest rate on first home mortgages at the end of February was 5.8 percent. This compares with nearly 11 percent at the top of the cycle in 2008. The difference between the two means that households are saving around $370 per week in interest costs so it is not surprising that they are slightly more willing to pay more for houses. Of course the actual interest rates paid by households vary widely and many will be saving more than $370 a week. At the same time wages are rising at just over 3 percent per annum while the cost of living is increasing at 0.1 percent meaning that wages are keeping ahead of the cost of living.Nuk Korako: How does an independent monetary policy support investment employment and growth?Hon BILL ENGLISH: New Zealand has an independent monetary policy built on the idea that politicians cannot be relied on to sensibly set interest rates. The value of independent monetary policy is widely recognised all around the world. That independence gives households and businesses relative certainty about what will influence future interest rates economic output and prices. This of course creates a more certain environment for investment and employment. New Zealand’s monetary policy framework was put in place 30 years ago precisely to deal with the problem of politicians setting interest rates.Nuk Korako: What reports has he seen on alternative approaches to economic management?Mr SPEAKER: Before I call the Minister I do not want this question to then lead to be an attack on an Opposition party. But I will allow—[Interruption] Order! I will allow the Minister to at least start his answer.Hon BILL ENGLISH: Without naming the source of any of these reports there has been a flurry recently: legislating retail interest rates taxpayer bailouts for farmers stiff-arming banks overriding Pharmac and opposing free trade. [Interruption]Mr SPEAKER: Order! A number of front-bench members continue to speak when I am on my feet. I reminded one in particular yesterday not to do it and I issue the same warning again.Grant Robertson: What responsibility does he take for throwing fat on the fire when it comes to dairy debt given that it has grown $11 billion since the global financial crisis on the back of his policies to encourage that kind of thing?Hon BILL ENGLISH: The Government of course takes responsibility for things like the New Zealand - China free-trade agreement—for which Labour deserves credit for signing—which was a boost to our dairy industry. But I would have to say in considering the decision of dairy farmers to borrow that member should show them a bit more respect. These are people running complex businesses and dealing with all sorts of risk including commodity-price risk and they made their decisions with their eyes open. And now they will be working with their banks to ensure they can get through a tight spot.