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Government to Reserve Bank - Rock or Hard Place?

The Government’s complacency on the housing crisis and the economy has put the Reserve Bank Governor in a no-win position as he contemplates the OCR tomorrow, says Labour’s Finance spokesperson Grant Robertson.

“Graeme Wheeler is stuck between a rock and a hard place in his decision. Inflation is non-existent, the exchange rate is stubbornly high and growth per person has been described by economists as "sluggish" pointing to the need for a boost through a further cut.

“On the other hand house prices are skyrocketing again with price to income ratios approaching 10 to 1 in Auckland and speculators running riot, shutting young New Zealanders out of the housing market. A further cut now could add fuel to this fire.

 

“Mr Wheeler can’t do it all on his own. The Government needs to take action on multiple fronts – that will make it easier for the Reserve Bank to do its job.

 

“National can’t just talk about the housing crisis. The latest flailing about on a land tax is too little, too late. A ban on foreign speculators buying existing houses and an aggressive programme to build more affordable houses are essential.

 

“The upcoming budget can’t repeat the mistakes of last year, with piecemeal changes laughed at by investors all the way to the bank.

 

“Bill English also needs to take concrete steps to stimulate and diversify the economy to stem the risks flowing from the dairy downturn. He must ensure new industries and businesses are encouraged to flourish and existing ones to add value, supported by more and immediate infrastructure investment.

 

“The Government’s approach to the economy shows they are becoming out of touch with middle New Zealand’s concerns. The Government needs to be a partner in order to give all New Zealanders the opportunity to get ahead,” says Grant Robertson.