Source: New Zealand Parliament – Hansard
ORAL QUESTIONS
QUESTIONS TO MINISTERS
Question No. 1—Finance
1. RYAN HAMILTON (National—Hamilton East) to the Minister of Finance: What recent reports has she seen on the economy?
Hon NICOLA WILLIS (Minister of Finance): Today, Statistics New Zealand released its labour market statistics for the September quarter. This release includes information from the household labour force survey, which looks at people’s labour force status, and the quarterly employment survey, which captures earnings, paid hours, and jobs. The household labour force survey showed that the unemployment rate increased from 4.6 to 4.8 percent in the quarter, and the quarterly employment survey showed that average hourly earnings increased 3.9 percent over the previous year.
Ryan Hamilton: Why is unemployment rising?
Hon NICOLA WILLIS: Unemployment is rising and has been rising since 2001 because New Zealand has been in a prolonged recession, with monetary tightening used to drive high inflation out of the economy. Sadly, recessions have a human cost. My heart goes out to people who’ve lost their jobs and who are struggling to enter the labour market. Rising unemployment is a reminder of how letting inflation get a grip on the economy is so damaging.
Ryan Hamilton: Was the increase in the unemployment rate as much as expected?
Hon NICOLA WILLIS: No. The increase from 4.6 percent to 4.8 percent was lower than forecasters had been predicting. In its August Monetary Policy Statement, the Reserve Bank had forecast 5 percent unemployment and the Treasury had forecast 5.2 percent in the Budget update in May. To give some historical context, I would also point out to members that over the last 15 years, the average unemployment rate in New Zealand has been 5 percent.
Ryan Hamilton: What is the outlook for unemployment?
Hon NICOLA WILLIS: Today’s results reflect where we are in the economic cycle. Typically, when the economy starts underperforming, the unemployment rate is slow to rise. Then when the economy starts to pick up, it can be slow to fall. In other words, unemployment is a lagging indicator. Now, there are clear indications that the economy has turned upwards, but even so, I would expect the unemployment rate to rise a bit further before beginning to fall. In the August Monetary Policy Statement, for example, the Reserve Bank was forecasting the unemployment rate to rise to a peak of 5.4 percent early next year, then steadily decline.
