4. GDP per Capita—Living Standards and Impact of Immigration SettingsGRANT ROBERTSON (Labour—Wellington Central) to the Minister of FinanceGDP per Capita—Living Standards and Impact of Immigration Settings4. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Finance: Does he stand by the statement in Budget 2016 that GDP per capita is what matters for achieving higher material living standards" and was growth in per capita GDP last year "about half a percent" as stated by the Minister of Economic Development?Hon BILL ENGLISH (Minister of Finance): In the long run yes and yes.Grant Robertson: Can he confirm that Budget 2016 says that GDP per capita growth stays under 1 percent for 2017?Hon BILL ENGLISH: No I cannot confirm that. Treasury advised me that it forecasts a lift in per capita GDP to 1.3 percent over the next few years. So that may have been referring to 2016-17.Grant Robertson: Can he further confirm that GDP per capita growth only rises above 1 percent in 2018 and 2019 according to this year's Budget and that that is on the basis of net immigration levels lowering from the current 70000 to fewer than 20000?Hon BILL ENGLISH: There will be a lot of factors involved in rising per capita GDP just as there have been a lot of factors—and in both cases some of them global—that have influenced lower per capita GDP but in an economy that is growing at 3 to 3.5 percent with moderate and consistent increases in real incomes per capita GDP is likely to rise.Grant Robertson: Is he confident that net immigration will return to the levels predicted in the Budget of fewer than 20000; if not will he concede that this is highly unlikely unless his Government heeds the call of everyone from the Reserve Bank Governor to Michael Barnett to Treasury and to the chief executive of ANZ Bank and reviews current immigration settings?Hon BILL ENGLISH: Immigration settings are always under review. In fact we come across many businesses that want looser immigration settings because their prospects are good they are investing in their businesses they are creating more jobs and they are having trouble getting the skilled people whom they need. I hope that they do succeed one way or another because that will help lift per capita GDP.Grant Robertson: Is he not getting more and more out of touch on what constitutes meaningful lifts in living standards in New Zealand when commentators are saying that New Zealand's economic growth is driven almost exclusively by rising population and Dieter Adam from the Manufacturers and Exporters Association says that we are importing growth rather than creating it?Hon BILL ENGLISH: Whoever that commentator was should get out and about. There is quite a wide range—[Interruption] In fact the feature of growth now is that it is driven by growth in exports by strong growth in the construction sector by growth in consumption where we have seen just in the last week that the confidence of households is up a bit and they are spending more. So it is fair to say that if you take away all the sources of growth then there will be no growth but in fact there are a number of sources of growth. A couple of years ago it was too much dairy. Before that it was all Christchurch. Now it is too many people wanting to live in New Zealand.Grant Robertson: When we have the lowest wage growth in 6 years a housing crisis pushing people to live in cars and personal household debt at its highest level since before the global financial crisis does he not think it is time to focus on building wealth in New Zealand rather than relying on immigration speculation and private debt to prop up the economy? Hon BILL ENGLISH: The member is simply wrong in his understanding of what is happening in the economy. We are seeing for instance the non-dairy exports sector grow at quite rapid—and what do appear to be nevertheless sustainable—rates creating new jobs and new growth. But the fact that more people—more New Zealanders—are staying home and more of them are returning home is a pretty clear indication that when people have the chance to vote with their feet they are not voting for that member's view of the economy because if they thought that they would not come here. They are voting for a positive view of the economy. Metiria Turei: When the Government talks about "achieving higher material living standards" does the Minister think that New Zealanders would consider warm dry and affordable housing critical to achieving those standards?Hon BILL ENGLISH: I am sure they would and that is why it is such good news that the Auckland Council has passed a plan that takes what were eight or nine different plans some of which are up to 25 years old and turns them into one plan for Auckland which enables twice as many houses to be built. That is great news for low and middle income families because the model that the council has been operating punishes them by making housing more expensive and over the next 5 to 10 years that will change. Metiria Turei: Are the record levels of homelessness and families being forced to live in cars and garages a sign that the Government is achieving higher material living standards for families?Hon BILL ENGLISH: No. It is a sign that the housing market is dealing with a perfect storm of demand: the lowest interest rates in 50 years; much steadier migration than anyone expected—that is migration has gone up and stayed up instead of dropping down; a record number of New Zealanders who are staying home and therefore not packing up their furniture and leaving the house empty. The Government is taking every reasonable measure it can to reduce the pressure on those who are at the bottom of the housing market and need support. Metiria Turei: Would the Minister not agree that if his Government was succeeding in achieving higher material living standards for families the numbers of Auckland children with rheumatic fever would be decreasing not increasing by 36 percent?Hon BILL ENGLISH: It has taken the member a while to catch up with what is happening with rheumatic fever. Three years ago along with the Māori Party we put $60 million into a programme to reduce rheumatic fever. It takes a complex range of solutions and I must credit the relevant Ministers and public servants who until quite recently were succeeding in dropping the rates of rheumatic fever faster than we might have expected. It does look as if that has flattened out and efforts will be increased to keep ahead if possible of that increase.Metiria Turei: Is it not clear that his Government's policies have failed because at this rate of increase we will be back to 2014 levels—record-high levels—of rheumatic fever for children by the end of this year? Hon BILL ENGLISH: I would not want to speculate on that but I think the member would want the House to understand that rates have been dropping significantly over the last year or two. But even if that is the case there are still other factors that indicate children are in poor housing and the Government has committed $36 million in the most recent Budget to a broader effort to deal with a wider range of children showing up at our hospitals with diseases that could be connected to the state of their housing and galvanising public agencies to take direct action to deal with those cases.Metiria Turei: Are not his Government's current failures and plans for the future cold comfort for the families of 45000 children who are now in poverty under this Government according to the Children's Commissioner? When will he implement a comprehensive poverty reduction plan to run alongside an economic growth plan to make sure that families will get their fair share?Hon BILL ENGLISH: The member is covering a wide range of issues there but one step in that direction was that on 1 April for the first time in 42 years those families received a significant increase in their welfare benefit over and above the Consumers Price Index—in fact up to $25 a week. I must say there is any number of families who have told me that although that has not dramatically altered their lives it has helped them deal with the pressure of hardship they were under. The next best thing we can do is follow through on getting more houses built so we can ultimately get their housing costs down."