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National’s reckless, out of touch approach to economy exposed

Today’s economic assessment from the Reserve Bank highlights the danger to the New Zealand economy from a National government that is recklessly complacent in the face of a housing crisis and a struggling export sector, Labour’s Finance spokesperson Grant Robertson says.

“The Reserve Bank is paving the way for further cuts to the Official Cash Rate as it struggles to bring the exchange rate to a more sustainable level, and to provide some impetus to lift inflation back towards its mandated level.

“Whatever we might think of that approach, at least the Bank has a plan and is trying to fulfil its legislated role. There is no sign that the National government is prepared to play its part.   

“There is a real risk that significant rate cuts will pour fuel on the out of control housing market, despite the recent announcement of extended LVRs. The total failure of the National government to even accept that there is a housing crisis, let alone come up with a plan to fix it is reckless and woefully out of touch. 

“As evidenced by the statements of the Reserve Bank, ANZ Chief Executive David Hisco, and many other commentators, National’s failure to act represents a major risk to New Zealand’s financial stability.

“The news that the latest OECD forecasts would see dairy farmers unlikely to break even until at least 2019, and the unsustainably high exchange rate also highlight the difficult environment for exporters. National’s much vaunted target of lifting exports to 40 per cent of GDP now feels like a cruel joke.

“Labour has a plan to fix the housing crisis that would see affordable houses and social housing built at scale, and would crack down on speculators offshore and at home.  We will also be a partner in the economy, supporting exporters to add value and diversify their products.

"New Zealand will only get on top of the problems facing our economy if we change the Government,” Grant Robertson says.