Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


PQ 1. Inflation—Government Measures to Address

[Sitting date: 24 July 2014. Volume:700;Page:1. Text is subject to correction.]
1. Hon PHIL HEATLEY (National—Whangarei) to the Minister of Finance : What measures is the Government taking to help control inflation for New Zealand families?
Hon BILL ENGLISH (Minister of Finance): Among a number of sensible economic measures, the Government has maintained practical and predictable monetary policy in the hands of an independent Reserve Bank. This assists to control the cost of living. Among the policies, the Government is working hard to get back to surplus this year, and to ensure existing spending is focused on programmes that make a real difference to New Zealanders rather than going on a large spend-up, which puts pressure on interest rates and the cost of living. We are supporting businesses to invest and create jobs, and incomes are rising faster than inflation. Consumer prices rose by 1.6 percent in the year to 30 June and food prices were up by 1.2 percent for the year. That compares with overall inflation of 5.1 percent in 2008, when annual food prices jumped by 11 percent rather than by 1.2 percent.
Hon Phil Heatley : How did consumer price inflation for the last June year compare with market expectations and what were the main components of that annual result?
Hon BILL ENGLISH : The quarterly Consumers Price Index increase of 0.3 percent and the annual rise of 1.6 percent were slightly below market expectations. Annual inflation remains in the lower half of the Reserve Bank’s 1 to 3 percent target zone, which is good news for households and businesses. In the June year the strong exchange rate was reflected in lower prices for audiovisual and computing equipment, lower vehicle prices, and a fall in prices for telecommunications services. These falls were offset by slightly higher prices for housing and household utility prices and increased costs for cigarettes and tobacco after an excise duty increase in January.
Hon David Parker : Is he aware that Consumers Price Index inflation does not incorporate interest rate increases, therefore hiding the significant increases to mortgage rates that have occurred over the past year because of his Government’s failure in Auckland housing policy?
Hon BILL ENGLISH : I do not think any interest rates increases have been hidden. People have been getting notifications in the mail for the last 3 or 4 months about their interest rates going up. I would point out to the member that at 3.5 percent the official cash rate is less than half what it was when his Government left office in 2008, when it reached a record 8.25 percent. The interest rate that he is claiming is too high is 3.5 percent; when he was in charge it reached 8.25 percent.
Hon Phil Heatley : What recent reports has he received on likely future trends in the cost of living?
Hon BILL ENGLISH : In its review of the official cash rate this morning the Reserve Bank said that overall “Inflation r emains moderate, but strong growth in output has been absorbing spare capacity.” Its independent decision to raise the official cash rate to 3.5 percent is expected to keep future average inflation near the 2 percent target and ensure that the economic expansion can be sustained. I am sure the House understands just how significant the Reserve Bank’s statements are. With the official cash rate at 3.5 percent the Reserve Bank is indicating that we can sustain growth around 3 percent. That is in sharp contrast to the interest rate structure under the previous Labour Government, when the official cash rate never fell below 4.75 percent in 9 years. When Labour left office it was at 8.25 percent, inflation was above 5 percent, floating mortgage interest rates were almost 11 percent, and house prices had doubled in the previous 7 years. It looks like we will be able to avoid all of those mistakes this time round.
Rt Hon Winston Peters : If the Minister compares interest rates with the USA, China, Japan, the UK, and nearly all of Europe, is it not a fact that, comparatively, we are paying the highest interest rates in 50 years?
Hon BILL ENGLISH : New Zealand is paying the lowest interest rates it has had in 50 years, or just slightly above. Of course, if the member wants long-term recession and enormous Government debt like they have in the UK and Europe, then of course we would have zero to 1 percent interest rates. But, actually, this Government chooses more jobs, more investment, and more growth, and that is why we have higher interest rates than they do.
Hon Phil Heatley : What reports has he seen on alternative approaches to monetary policy and economic management, and what impact would they have on the cost of living for New Zealand families?
Hon BILL ENGLISH : We have just seen one alternative approach from the leader of New Zealand First, who is suggesting that we have large deficits, enormous Government debt, and low growth rates, and that, therefore, we would have low interest rates.
Rt Hon Winston Peters : I raise a point of order, Mr Speaker. That is out of order. He cannot say that and speak for another party, particularly one that knows what it is doing.
Mr SPEAKER : The Rt Hon Winston Peters raises a reasonable point. It is inappropriate for any member to ask a question that is simply a means of attacking another party. Does the Minister want to add further to the answer?
Hon BILL ENGLISH : Of course I do.
Mr SPEAKER : Well, the Minister can, but it had better not be an attack on another political party.
Hon BILL ENGLISH : I have seen reports from parties that are so worried about the cost of living that they are going to put a $25 carbon tax on, which, of course, will raise the cost of living, not lower it.

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Greens: Russel Norman To Stand Down As Co-Leader

Green Party Co-leader Dr Russel Norman has announced today that he will stand down as leader at the party’s Annual General Meeting in May. Dr Norman will remain as Co-leader and retain his finance and climate change portfolios until the AGM.

“After nearly a decade as Co-leader, now is a good time to find a new challenge for myself, and to spend more time with my family” said Dr Norman.

“This is my ninth year as Co-leader and I think it’s time for a change. Now is a good time for new leadership for the Party. My replacement will start from a strengthened base and will have a full parliamentary term to establish himself in the role and take the Greens into government in 2017." More>>

 

Gordon Campbell: On The Eleanor Catton Rumpus

If anyone was in doubt about the accuracy of the comments made in India by Eleanor Catton, the reaction from some quarters here at home has gone a long way to proving her point… More>>

ALSO:

More Rent Assistance, Less State-Owned Housing: John Key Speech - Next Steps In Social Housing

"We are going to ensure that more people get into social housing over the next three years, whether that is run by Housing New Zealand or a community provider. The social housing budget provides for around 62,000 income-related rent subsidies a year. We are committed to increasing that to around 65,000 subsidies by 2017/18, which will cost an extra $40 million a year." More>>

ALSO:

The Future Of Work: Andrew Little - State Of The Nation 2015

In 2005 when I led the EPMU we worked together with Air New Zealand to find a way to keep engineering jobs that were heading overseas. A lot of these workers were people I’d known for years and they were facing not just losing their jobs but not being able to find the kind of work they do without going overseas. A lot of people were facing personal and financial upheaval.... More>>

ALSO:

Gordon Campbell: On The Sabin Case, The Pressures On Greece And (Songs About) Coyotes

Mike Sabin is a National MP, and the current chairman of Parliament’s law and order committee. Yet reportedly, he is being investigated by the Police over an assault complaint... However, the PM will not comment on any aspect of the story. More>>

ALSO:

Houses, ISIS, King (& Catton): PM Post-Cabinet Press Conference

The Prime Minister met with reporters to discuss: • Social housing, the Auckland housing market • The prospect of joining international forces to combat ISIS • David Bain’s compensation • The lowering of the flag for the King of Saudi Arabia's death ... More>>

ALSO:

Gordon Campbell: On Tomorrow’s Speeches By John Key And Andrew Little

The Key government has already kicked off the political year on a stridently ideological note, with Environment Minister Nick Smith choosing to lay all manner of sins at the door of the RMA. Tomorrow, the government will wheeling out its best salesman – Prime Minister John Key – to sell its plans for state housing… . More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news