Bakshi Kanwaljit Singh: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeBakshi Kanwaljit Singh: Oral Questions — Questions to Ministers[Sitting date: 03 November 2015. Volume:709;Page:7555. Text is incorporated into the Bound Volume.]1.KANWALJIT SINGH BAKSHI (National) to the Minister of Finance: What reports has he received on the New Zealand economy?Hon BILL ENGLISH (Minister of Finance): Yesterday Treasury published its Monthly Economic Indicators. This shows that slower economic growth in the first half of 2015 is expected to return to around trend growth or between 2 and 2.5 percent supported by a recent rebound in dairy prices as well as wider economic resilience as export-driven firms enjoy the benefits of a lower exchange rate. Inflation remains low. Higher population growth is now boosting housing markets both in and outside Auckland. There are of course risks to the outlook from the weak global economy but overall the country remains on track for moderate economic growth.Kanwaljit Singh Bakshi: What reports has he received showing increasing business confidence in the economic outlook?Hon BILL ENGLISH: Over the last 6 months or so business confidence has been up and down. The most recent report for October shows an improvement from recent lows—that is slightly higher investment intentions slightly better employment intentions and a lift in residential investment intentions; all aspects of moderate future growth. ANZ says the increased confidence is based around a rebound in dairy prices and points to increasing activity in tourism the services sector primary industries and housing outside Auckland. These are supported by lower interest rates and a lower New Zealand dollar. So they indicate moderate growth over the next 6 to 12 months.Kanwaljit Singh Bakshi: How does Treasury’s outlook for the economy compare with the latest forecast set out in Budget 2015?Hon BILL ENGLISH: As we mentioned Treasury is now looking at economic growth returning to trend—around 2 to 2.5 percent—but the low growth for the calendar year 2015 could be under 2 percent. This is clearly weaker than the 3 percent growth Treasury was expecting in Budget 2015 and that of course will have a flow-on impact on unemployment and wages. Growth out ahead of us of 2 to 2.5 percent means we will still see solid job growth and wage increases but a bit less than was expected in the Budget.Kanwaljit Singh Bakshi: What is the impact of low inflation given that it is currently sitting at 0.4 percent in the year to September?Hon BILL ENGLISH: The low cost of living increases are good for families. They mean that any pay increases go further and this also helps keep interest rates lower for longer. The measure of inflation though is likely to increase when the effect of the significant drop in oil prices falls out of the index. Our revenue is directly influenced by the rate of inflation so a lower rate of inflation means the Government revenue is expected to be lower than was previously forecast.Rt Hon Winston Peters: What effect on the current account deficit will the $4.4 billion in profit this year repatriated by the big four Australian banks have?Hon BILL ENGLISH: Of course it is not all repatriated. The New Zealand Government taxes those profits and I think that in the last year the banks paid something like $2 billion worth of tax. But overall the current account deficit and the international investment position have been improving and generally have been better than forecast for the last 4 or 5 years.