[Sitting date: 26 November 2014. Volume:702;Page:1. Text is subject to correction.]

1. TODD MULLER (National—Bay of Plenty) to the Minister of Finance : What reports has he received about the latest trends in savings levels by New Zealand households?

Hon BILL ENGLISH (Minister of Finance): Last week Statistics New Zealand issued the national accounts income and expenditure data for the year to March 2014. It shows that New Zealand’s household savings rate has now been positive for 5 consecutive years—something that has not happened since the early 1990s. In fact, before 2010 household savings had been negative in all years but one since 1995. Household savings totalled $2.8 billion in the year to March 2014, a positive rate of 2.1 percent of disposable income. This is a result of the resilience shown by households, supported by Government policy encouraging savings and reducing their dependence on debt, and more moderate consumption, therefore assisting in rebalancing the economy.

Todd Muller : Over the past 6 years, what measures has the Government taken to encourage households to save a bit more and to reduce borrowing and consumption?

Hon BILL ENGLISH : Well, a number of measures. One of those was a comprehensive tax package in 2010, which included across-the-board reductions in tax on savings and work, and an increase in tax on consumption and property investment. In addition to that, the Government has built on the work of the previous Government in reregulating our capital and finance markets, and that is now leading to a reinvigorated capital market with more opportunities for New Zealanders to invest in owning a range of companies.

Todd Muller : What else did the latest national accounts data confirm about the savings trends in other sectors of the economy?

Hon BILL ENGLISH : It showed that the total value of the New Zealand economy is now $231 billion of GDP, up 7.3 percent from 2013. This is the largest increase in per capita growth since 2008. National savings totalled $15.5 billion. That is up $8.4 billion from the previous year and was positive for all sectors of the economy. Two notable contributors were improved net exports and higher business profits. Revised estimates show that 2013 was the first year since 2000 that all sectors had positive savings.

Todd Muller : How do the positive household savings over the past 5 consecutive years compare with the previous trends in household savings rates?

Hon BILL ENGLISH : At the moment we have improving household savings rates in a growing economy. However, when the economy was growing between 1999 and 2008, the opposite occurred. In fact, household savings were negative 0.6 percent—negative 0.6 percent—by 2006. But this was hardly a surprise. At that stage Government spending had gone through the roof, the current account deficit was a record 8 percent of GDP, house prices were on track to double, and household borrowing soared by more than 150 percent in the 9 years to 2008. We do not think that any of those excesses are going to accompany this current period of economic growth.

Grant Robertson : Under the national accounts that he has just cited, in real or nominal terms are exports above or below 30 percent of GDP for the year to March 2014?

Hon BILL ENGLISH : It is interesting that the member should raise that issue because—[Interruption] Well, I cannot give the member—[Interruption]

Mr SPEAKER : Order! [Interruption] Order! I will decide. Certainly a question was asked, and I want to hear the answer, so for the answer to be heard, it requires less noise from my left.

Hon BILL ENGLISH : I cannot give the member that answer in detail. I cannot give the member that answer in detail, but I have to say that when you take GDP as a whole, we are in a phase where house prices have been high and the Christchurch rebuild has pushed up house prices, so resources are tending to flow to construction. We are in a phase where our largest dairy export has low prices. So it would not surprise me if exports as a percentage of GDP are not the same as they were a few years ago. But the Government’s objective is clear, and that is to raise exports as a percentage of GDP by doing things like reducing taxes and the size of the Government.

Grant Robertson : I raise a point of order, Mr Speaker. To help out the Minister of Finance, I seek leave—

Mr SPEAKER : Order! [Interruption] Order! If the member now wants to table a document, he rises to his feet, asks for a point of order, and then seeks leave to table that document.

Grant Robertson : I seek leave of the House to table a document prepared by the Parliamentary Library that shows that the national accounts show that in the year ended March 2014, in both nominal—

Mr SPEAKER : Order! [Interruption] Order! That document has now been well and truly described. The document from the Parliamentary Library—leave is sought to table it. Is there any objection? There is not; it can be tabled. Document, by leave, laid on the Table of the House.

Grant Robertson : Is the fact that exports as a percentage of GDP are languishing below 30 percent in both nominal and real terms, despite his promise that they would reach 40 percent, a sign of success or failure in rebalancing the economy?

Hon BILL ENGLISH : I would make a technical point first. There has been a rebasing of GDP, which I am sure—

Grant Robertson : Both of them.

Hon BILL ENGLISH : Yes, yes, I know, but the member will need to go back and see how those figures are calculated. Secondly, if the member regards the current state of the New Zealand economy as failed economic policy, I would hate to see what success looks like because, actually, this economy is growing as strongly as anywhere in the developed world. That growth is looking sustainable, households are getting higher incomes, more jobs are being created, and unemployment is dropping. We call that success, and I suspect that when the member is more familiar with his portfolio, he will regard it as success.

ENDS

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