How is the Government's economic plan continuing to support the most vulnerable New Zealanders while at the same time encouraging economic growth?

Wednesday, June 3, 2015

STUART SMITH to the Minister of Finance: How is the Government’s economic plan continuing to support the most vulnerable New Zealanders while at the same time encouraging economic growth?

Hon BILL ENGLISH (Minister of Finance): The Government is focused on striking a good balance between responsibly managing a growing economy, keeping spending under control, and supporting the most vulnerable New Zealanders. Despite tight fiscal constraints the Government delivered several important gains for families from 1 April this year.

Paid parental leave increased by 2 weeks, and it will increase by another 2 weeks next April. The adult minimum wage increased from $14.25 to $14.75 an hour. New Zealand superannuation increased by another 2 percent, and average ACC levies paid by employers and self-employed people fell by over 5 percent. From 1 July children under 13 have access to free general practitioner visits and prescriptions. An average ACC levy for a private motor vehicle will fall by around $130 a year.

Stuart Smith: How will Budget 2015 advance the Government’s programme to support more jobs and higher incomes for New Zealand families?

Hon BILL ENGLISH: One of the most important things we can do for families, particularly vulnerable families, is to support an economy that is generating more jobs. The growing economy has generated 194,000 extra jobs since 2011, and Treasury forecasts that another 150,000 jobs will be created by mid-2019.

Average annual wages have increased by $5,700 in the last 4 years, and they are forecast to rise by another $7,000 in the next 4 years, to $63,000 a year. That is a $13,000 increase over 8 years, or about a 25 percent increase in the average wage compared with inflation of around 14 percent over the same period.

Stuart Smith: How will the $790 million child hardship package in Budget 2015 deliver more support for families in need?

Hon BILL ENGLISH: It will certainly deliver more support for family budgets. Benefit rates for families with children will rise by $25 a week, which is the first increase—

Andrew Little: Why do they have to wait 10 months?

Hon BILL ENGLISH: Actually, they have had to wait 43 years because it is the first increase—which I think is through two Labour Governments. It is the first increase separate from inflation adjustments for 43 years. Interestingly, Labour voted against it yesterday in the House.

Stuart Smith: What further steps did the Budget take to help vulnerable New Zealanders, particularly in the area of finding work?

Hon BILL ENGLISH: It is not just families with children who need work to get out of welfare dependency; there are also large numbers of other New Zealanders who are on or who will be on benefits for a long time without additional support. The Budget provided $28.8 million for four social bonds programmes. The first will expand on a small and successful pilot delivering employment services to New Zealanders with mental health conditions.

Social bonds, which have been used overseas, will become another part of the Government’s drive to deliver better results, with innovation between the public and private sector organisations working together. Some, of course, would rather leave people with mental illness isolated, alone, and out of work than try something new to get them into work.

Grant Robertson: Is it correct that his so-called economic plan will mean, in fact, according to the Budget, that growth will halve to less than 2 percent within 4 years?

Hon BILL ENGLISH: The forecasts do show that after several years of growth at around 3 percent, which is regarded as the economy’s potential, that growth will drop back a bit. Of course, part of this Government’s intent is economic policy that supports the rates of growth that we currently have, and we will be trying very hard to support those businesses that invest, employ, and create higher growth rates than those projected.

Grant Robertson: With reference to that answer, is it correct that Treasury’s forecasts that show a halving of growth actually rely on dairy prices rebounding, and now they have dropped 54 percent since last year?

Hon BILL ENGLISH: No, the member is not correct. The growth forecasts do not rely only on the dairy prices. Many other aspects of the export economy are going very well. The wine industry is growing strongly; the *IT industry is growing strongly; the meat industry is not doing too badly; our biggest industry, tourism, is going *gangbusters; and our *third-biggest, international education, is also growing strongly. Those things are also part of the forecasts.