Government inaction leads to blurring of roles

The Treasury wouldn’t have had to warn the Reserve Bank to stick to its core functions if the Government had taken prompt and substantial measures to rein in skyrocketing Auckland house prices, Labour’s Finance spokesperson Grant Robertson says.

“The problems for the Government don’t end there with the Reserve Bank’s Statement of Intent today confirming it may have to take further action on the financial instability risk posed by Auckland’s ‘population growth, low mortgage interest rates and increased investor participation’.

Documents released last night confirm Labour’s concerns that LVR mortgage restrictions introduced by the Reserve Bank in 2013 have increased buying by speculators and shut first home-buyers out of the market.

“LVRs have also had the unintended consequence of preventing people in the regions buying homes, something Labour suggested could be mitigated through exemptions which came too late.

“In fact, the Treasury now agrees with the Reserve Bank that the overheated Auckland housing market ‘could potentially pose a threat to financial stability’.

“The Reserve Bank was forced to take action because National had its head in the sand over the housing crisis. First it refused to acknowledge there was a problem and then when it finally took action, its weak and half-baked measures had little impact.

“The Treasury has also confirmed Labour’s suspicions the Government’s housing policy was put together on the hoof.

“These documents are a damning indictment on the Government which must now take meaningful action to stop foreign speculators pushing house prices out of reach of New Zealand families and embark on a mass state-backed building programme,” Grant Robertson says.