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National must heed OECD warnings on economy

The latest OECD Economic Survey on New Zealand is a stark warning that more must be done if future generations of New Zealanders are to have a decent standard of living and economic opportunity, says Labour’s Finance Spokesperson Grant Robertson.

"The OECD report finds that housing is increasingly unaffordable, inequality and poverty need to be tackled head on and the health of the economy is increasingly at risk from a further downturn in commodity prices. These are warnings that the National government must heed.

"While the report shows that New Zealand is doing better than other countries, there are clear signals that the complacency of the current government is putting the future health of the economy at risk. We continue to lag behind the developed world on incomes. Our over-reliance on raw commodities presents a significant risk if prices continue to fall and growth in China and Australia slows. With New Zealand’s relatively high levels of private debt from overvalued Auckland housing and highly-leveraged dairy farms, a commodity price or interest rate shock could see cracks in the economy widen.

"The OECD says what the government refuses to admit, that Auckland house prices are a constraint on New Zealand’s economic growth and a significant financial vulnerability. New Zealand and Auckland in particular are now among the worst in the OECD for housing unaffordability. This unaffordability is also exacerbating poverty and inequality, with high housing costs causing the greatest ill effect for the poorest in society.

"The report also states that income inequality in New Zealand is worse than the OECD average, and there is much work that could be done to close the gap. As the OECD found last year, excess inequality slows economic growth. What is needed is a coordinated plan to give all Kiwis the chance of success, not just the short term political responses as we have seen from National.

"This report shows that New Zealand has much to be proud of, and much to build upon. There are many recommendations, not all of which Labour supports, but its overall message is one that must be heeded- we owe it to future generations to act now to build an economy that supports all New Zealanders to have a fair chance at success and prosperity," Grant Robertson said.