Oral Questions

Mr Speaker, I seek leave to make a personal explanation to correct an answer I gave during oral question No. 1 yesterday.

SPEAKER: Leave is sought for that purpose. Is there any objection? There appears to be none.

Rt Hon CHRISTOPHER LUXON: I was asked a supplementary question regarding funding for flood risks in South Dunedin. I replied that the previous Government had declined a proposal. What I should have said was that the previous Government did not fund the proposal. The South Dunedin Future programme was not included in the National Resilience Plan projects which the former Labour Government funded on 18 September 2023.

Question No. 1—Finance

1. to the Minister of Finance: What recent reports has she seen on the economy?

Good news. This morning, Statistics New Zealand released the latest inflation figures, which are for the September quarter of this year. This release shows annual Consumers Price Index (CPI) inflation of 2.2 percent in the September quarter of this year. This is the first time that inflation has been below 3 percent since March 2021. We have broken the back of the inflation beast.

James Meager: How did this inflation result compare to expectations?

Hon NICOLA WILLIS: Annual CPI inflation of 2.2 percent was around the level most forecasters, including the Reserve Bank, were expecting. Prices for tradable goods and services actually fell by 1.6 percent over the year, which is good news for New Zealanders, with petrol prices dropping 8 percent. Non-tradable inflation, on the other hand, is proving stickier with an annual rate of 4.9 percent. Rents, rates, and insurance were, again—

Rt Hon Chris Hipkins: Oh! That’s the bit the Government’s responsible for.

Hon NICOLA WILLIS: It is sad to have the Leader of the Opposition interjecting and showing such disregard for the New Zealanders who have been pummelled by price increases that were crushing for years.

SPEAKER: That might have been a point of order, but it’s certainly not an answer to a question.

Hon NICOLA WILLIS: I think in the spirit of debate, with a back and forth, this is something that all members of the House should celebrate together, because what it represents is a time in which New Zealanders will cease to have the crushing price increases that became the norm under Labour.

James Meager: How does this compare to previous inflation results?

Hon NICOLA WILLIS: New Zealand recently endured a cost of living crisis, with annual inflation peaking at over 7 percent. From the last quarter of 2020 to the last quarter of 2023, consumer prices rose a total of 19 percent in just three years, and over that period of the previous Government, life got more expensive for New Zealanders by almost 20 percent, and people’s savings were eroded by almost 20 percent. Inflation is now back within the Reserve Bank’s target range; the genie is back in the bottle; and the era of high, persistent, crushing price increases is over.

James Meager: What is the target range for inflation?

Hon NICOLA WILLIS: The remit I issued in December states that the Monetary Policy Committee‘s objective is to achieve and maintain future annual inflation between 1 and 3 percent over the medium term, with a focus on keeping future inflation near the 2 percent midpoint. The fact that inflation is within that band and close to the 2 percent mid-point means the Reserve Bank has the confidence to begin reducing interest rates. The bank is now easing off the brake it has been pressing firmly down on for the last few years.

Question No. 2—Prime Minister

2. to the Prime Minister: Does he stand by all his Government’s statements and actions?

Yes, and especially our actions to get on top of inflation. This morning, Stats New Zealand confirmed that inflation fell to 2.2 percent in the September quarter, the lowest rate in more than 3½ years, and it is clear that our plan, our economic plan, is working, which is why under our Government we’re getting on top of inflation fast. Just before the election last year, Treasury picked that inflation would have only fallen to 3.1 percent by this time and wouldn’t have reached 2.2 percent until the end of next year. That’s despite all the scaremongering from the Opposition that fully funded tax relief—which Labour didn’t support—for supporting working families with the cost of living would actually push inflation higher. It didn’t do that. But, instead, our economic plan is delivering lower inflation, lower interest rates, two interest rate cuts in 10 months versus, I think, six or seven increases over the last six years. Importantly, what we’re seeing is that the foundations for economic growth to get New Zealand back on track are in place.

Rt Hon Chris Hipkins: Why did his Government cut funding for apprenticeships in critical infrastructure sectors when apprentice numbers are already in decline, compounding the skills shortages in the trades sector?

Rt Hon CHRISTOPHER LUXON: Well, what I’d say to the member is the Apprenticeship Boost was actually another case of Labour leaving behind another fiscal cliff. We’ve made funding for Apprenticeship Boost permanent so the programme wouldn’t expire like it would under Labour and, at the same time, we’re targeting it at the skills that we need.

Rt Hon Chris Hipkins: Why has he and his Government cut funding for apprenticeships in areas such as pipeline construction, bitumen resurfacing, road construction and maintenance, and drinking- and waste-water treatment when this country is facing major challenges in those areas and this will only exacerbate skill shortages?

Rt Hon CHRISTOPHER LUXON: Well, we have to make sure we are spending money carefully. That’s what we do on the side of the House; we don’t waste money. That’s only a very small proportion of those that are actually using Apprenticeship Boost, and what I’d say to you is that we are making sure that we’ve got support for the skills we need like building and agriculture and manufacturing, forestry, food, and hospitality.

Rt Hon Chris Hipkins: Why was providing over $200 million in tax breaks to the tobacco company Philip Morris more important to his Government than keeping people in apprenticeships?

SPEAKER: Just a moment. I think there’s a word there that probably shouldn’t have been in it. Do you want to ask that question again?

Hon Member: What’s that?

SPEAKER: I think you referred to the entity belonging to someone, which it didn’t. So just ask the question again.

Rt Hon Chris Hipkins: Why was providing over $200 million in tax breaks to companies like Philip Morris, the country’s largest supplier of cigarettes, more important to his Government than keeping people in apprenticeships?

Rt Hon CHRISTOPHER LUXON: Well, I reject the characterisation of that question. What I would say to that member is that on this side of the House, we are very committed to lowering daily smoking rates. We are determined to deliver on Smokefree 2025 and we’re going to make alternatives available. Also what I’d say is, with respect to the so-called tax that he talks about, what we’ve done is make sure Treasury is conservatively estimating the loss of excise tax by any shift that happens to an alternative product other than cigarettes.

Rt Hon Winston Peters: Prime Minister, how often have you met someone whose logic is that when the tax on cigarettes go up, as it did December last year, it somehow is a concession to some business?

Rt Hon CHRISTOPHER LUXON: It’s just prudent to actually set money aside. And for the most extreme scenario, if we get a shift from cigarettes to alternative products—that’s what we’re accounting for.

Rt Hon Chris Hipkins: Why should the construction sector have trust in his Government when they are cutting apprenticeships and, in their first 10 months in power, they have spent their time gutting school-building programmes, shelving State housing projects, cancelling major infrastructure projects, and leaving the industry staring down a pipeline that’s looking more like an empty barrel?

Rt Hon CHRISTOPHER LUXON: Again, what you see is you see business confidence at a 10-year high. Why is that? Because they know this is a Government dealing with and improving the economic fundamentals. We are making sure there is financial discipline and no wasteful spending. We’re making sure that inflation now, for the first time in 3½ years, is within the band. Interest rates cuts are coming down; confidence is up. That leads to economic growth and people in work.

Rt Hon Chris Hipkins: If things are so good for the building and construction sector, why are there 10,000 fewer people employed in the building and construction sector now than there were the day he became Prime Minister?

Rt Hon CHRISTOPHER LUXON: Because this economy is dealing with the lag effects of woeful economic mismanagement by that member and his former Government. What is good news is that consents are up 2 percent; the Infrastructure Commission’s latest pipeline estimates a total of over 6,000 projects—$147 billion worth; and the transport Government policy statement put in $33 billion for the next three years. If the member cares a lot about it, I look forward to his support of our fast-track legislation, because that was a great idea from David Parker. We’ve built on it; there’s 149 fantastic projects: 55,000 potential new homes, a 30 percent increase in electricity generation, and 180 kilometres of new roads, rail, and public transport.

Rt Hon Chris Hipkins: Why won’t he admit that his Government doesn’t care about the damage it causes to New Zealand’s infrastructure, workforce, and economy, as long as his favourite pet projects, like tax breaks for landlords and tobacco companies, get billions of dollars that could so desperately be spent elsewhere?

Rt Hon CHRISTOPHER LUXON: Aww, it’s a terribly sad day for the Leader of the Opposition. We have good news, which is we have inflation in the bands, we’ve delivered income tax relief for low and middle income working New Zealanders—people the Labour Party used to care about but don’t any more—we’ve got fast-track legislation sitting there, and he refuses to support it. Come on board, do something positive.

Question No. 3—Social Development and Employment

3. to the Minister for Social Development and Employment: What recent data has she seen on the welfare traffic light system?

Data from the first full calendar month of the traffic light system is very encouraging. It shows 98 percent of beneficiaries are at green, meaning they are successfully meeting their obligations. Just 2 percent—around 5,900 people—were sitting at either orange or red, meaning they had not taken the steps required of them to find or prepare for work. While it is early days, this data indicates that the new system is helping beneficiaries to understand what is expected of them and helping them to stay on track with their obligations.

Joseph Mooney: How has the traffic light system impacted the number of obligation failures and benefit sanctions?

Hon LOUISE UPSTON: Since the implementation of the traffic light system, we’ve already seen a positive impact. In September, there were about 500 fewer obligation failures and 600 fewer sanctions imposed on beneficiaries than the month before. Again, while it is still early days, this is an encouraging sign that the system is working as intended by providing clear, straightforward information to beneficiaries about their obligations and helping them to take proactive steps towards employment.

Joseph Mooney: What message does the Government have for beneficiaries who are work-ready but not fulfilling their obligations?

Hon LOUISE UPSTON: These numbers show that about 4,500 of the 4,600 beneficiaries who are being sanctioned for not fulfilling their benefit obligations are work-ready job seekers. Our Government’s position on this is clear: we will fully support job seekers who are motivated to find work and improve their circumstances, but we will not tolerate those who are capable of working and choose not to take the necessary steps to prepare for or find work. Receiving a benefit comes with obligations that reflect the expectations of the hard-working New Zealanders who fund the welfare system through their taxes.

Joseph Mooney: What are the future plans for the welfare traffic light system?

Hon LOUISE UPSTON: Next year, we will introduce new non-financial sanctions and increase accountability measures for those who repeatedly fail to comply with their benefit obligations. We will also implement a requirement for individuals on jobseeker support to reapply every six months to continue receiving payments. These changes are designed to ensure the welfare system remains fair and that beneficiaries remain engaged in the process of finding a job. Our overall goal is to have 50,000 fewer people on the jobseeker benefit by 2030, as we work towards a society where more New Zealanders are in employment and able to support themselves and their families.

Question time interrupted.