Goldsmith Paul: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeGoldsmith Paul: Questions for Oral Answer — Questions to Ministers[Sitting date: 16 October 2013. Volume:694;Page:13913. Text is incorporated into the Bound Volume.]1.PAUL GOLDSMITH (National) to theMinister of Finance: What reports has he received about forecasts for the New Zealand economy and how are these being reflected in levels of business confidence?Hon BILL ENGLISH (Minister of Finance): We are now regularly seeing reports showing that the economy is continuing to strengthen producing more jobs and higher incomes. In particular an authoritative source is the International Monetary Fund’s annualWorld Economic Outlook which forecasts that New Zealand would this year and next year have the fifth-highest growth rate out of 35 developed economies. New Zealand’s growth rate was picked to be 2.5 percent for each of the next 2 years. The average growth rate for advanced economies was less than half that at 1.2 percent. Closer to home the BNZ-Business New Zealand Performance of Services Index rose to its highest level since the survey began in 2007. The September ANZ Business Outlook shows business confidence at its highest level since March 1999.Paul Goldsmith: In light of improving business confidence what reports has he seen about staff-hiring intentions amongst businesses?Hon BILL ENGLISH: Of course it is important that high levels of confidence convert into higher levels of jobs but if you do not have the confidence first you certainly will not get the jobs following. The ANZ report I referred to in my previous answer says: “Employment and general investment intentions remain rock solid at +19 and +20 respectively”—that is a net 19 or 20 percent of businesses are going to expand their hiring and their investment.TradeMe’s vacancy data shows that vacancies advertised on that site rose by 9.6 percent in the last quarter compared with the previous quarter. The head of TradeMe jobs was quoted as saying: “We’re becoming confident that the buoyancy in the Kiwi job market isn’t a temporary affair … It reflects an increasing confidence as employers look to boost investment in new staff.”Paul Goldsmith: How is an increase in employment intentions likely to flow through to wage growth?Hon BILL ENGLISH: The Government has been very focused on higher incomes as well as more jobs through what have been some pretty challenging economic circumstances. Nominal wage growth remains subdued but this needs to be seen in the context of subdued consumer inflation. The New Zealand Income Survey released a couple of weeks ago showed that the median weekly wage and salary income increased by $844 or 4.8 percent between June 2012 and June 2013. Wage growth has to be based on business confidence improved profitability and good economic momentum.Paul Goldsmith: What are the latest figures on inflation and how is that likely to affect households and the wider economy?Hon BILL ENGLISH: The CPI came out today showing a rise of 1.4 percent in the year to September. About half of the increase was attributable to higher petrol prices and seasonally higher vegetable prices. The long period of restrained inflation and low interest rates has been significant in helping New Zealand households get on top of their debt and enjoying the benefit of real increases in wages even though they have had relatively low wage increases. This is a lot better than the picture just 5 years ago where inflation was running at 5 percent instead of 1.4 percent and first mortgage rates were 10.5 percent instead of 5 percent when Labour left office.