7. Economic Growth—GDP Per CapitaGRANT ROBERTSON (Labour—Wellington Central) to the Minister of FinanceEconomic Growth—GDP Per Capita7. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Finance: Is GDP per capita growth what matters most for achieving higher material living standards as stated in Budget 2016; if so why?Hon BILL ENGLISH (Minister of Finance): Yes; because it is a measure of wealth per person but it is only one measure of material living standards. There are others such as levels of employment wages and economic growth all of which add up for New Zealand to a positive package of reasonable outlook for the economy and therefore for household incomes and jobs.Grant Robertson: Is ANZ chief economist Cameron Bagrie correct when he describes an annual per capita GDP growth rate of 0.7 percent as lacklustre"?Hon BILL ENGLISH: It is a matter of opinion and sometimes I agree with what the ANZ Bank economist says and sometimes I do not. It is not a surprise though that at the moment per capita GDP—its growth rate—is lower than at some previous periods because we are having a strong growth in population. New Zealand has become a place where Kiwis want to stay home and others want to come and live and so population numbers are growing just a bit faster than GDP. In time though that growth will slow down and GDP per capita will pick up.Grant Robertson: Is Westpac wrong when it says that the picture is "far from perfect" when it comes to growth because it is forecasting per capita growth in the June quarter to amount to 0.6 percent?Hon BILL ENGLISH: Where I would disagree with Westpac is relying on quarterly numbers. I mean GDP per capita matters in the long run. In the short run we have got a surge in population. That is a good problem. We would have high monthly GDP per capita if lots of people were leaving and of course that would be a much bigger problem than the problems of growth which we have and are positive problems.Grant Robertson: Why is Paul Glass from Devon Funds Management wrong when he says: "You do need to strip out population growth because the number that matters is real GDP growth per capita. We only grow our share of the economic cake when GDP per capita grows otherwise we are running hard to stay still."?Hon BILL ENGLISH: The member is up to his old trick and that is that if you take out all the things that are growing then there is no growth. So it used to be too much dairy—you would take that out and there was no growth—too much tourism too much construction and now it is too many people. But actually if we include all the things that are growing then yes we have a growing economy.Fletcher Tabuteau: Does the Minister accept that a feeble real per capita growth rate and a persistently low inflation rate by definition means that many people are unnecessarily underemployed and unemployed right now?Hon BILL ENGLISH: Some people are unemployed and some are underemployed. Our unemployment rate is I think in about the top half-dozen of the developed world and the underemployment rate—it has got a new name now but if you want to compare it the New Zealand rate is 12 percent and the Australian rate is 20 percent. That is why New Zealanders are staying home in their thousands. Things simply look better here than in other parts of the world and that is a good thing not a bad thing.Grant Robertson: Is Paul Glass from Devon Funds Management not correct when talking about GDP per capita growth being lacklustre and saying: "That is why people don't really feel like the economy is growing strongly because on a per capita basis it isn't."?Hon BILL ENGLISH: It is a sweeping generalisation. For instance as we have explained earlier in answers to questions in the House real wages are growing at a rate better than quite a lot of times in the past. If you take GDP per capita the dairy sector incomes for instance which are 6 to 7 percent of GDP are way down on where they were. That does not mean everyone's income is down; it holds the average down but actually wage and salary earners have significant and persistent real wage increases. They are doing well. They are doing pretty well. Farmers are not doing so well at the moment but the bad news for the member is that if dairy prices pick up per capita income will also pick up and when he asks the question for the 12th time I think or the 13th time the answer will be: "Pretty good.""