The Reserve Bank's decision to cut the Official Cash Rate to 3 per cent shows there is no encore for the so-called 'rock star' economy, says Labour's Finance Spokesperson Grant Robertson.
"Today's interest rate cut comes off the back of record lows in dairy prices, plunging business, consumer and employment confidence, dropping exports, a decrease in advertised jobs and stagnant wage growth. That the Governor has chosen to cut rates despite the risk of pouring petrol on an inflamed Auckland housing market shows just how serious New Zealand's worsening economic outlook is.
"Some economists have speculated that the OCR could soon be cut to as low as 2 per cent. That is 50 basis points lower than what the Official Cash Rate was at the height of the Global Financial Crisis. That wouldn't be happening if the New Zealand economy was in good shape.
“The Reserve Bank Governor highlights the vulnerability of the New Zealand economy with the Canterbury rebuild peaking and plunging dairy prices.
"New Zealand is as reliant on dairy exports as Australia is on iron ore. The recent drop in iron ore prices and the economic calamity that resulted in Australia should serve as a warning to our government of the consequence the dairy price collapse will have in New Zealand. Yet the current Government is content to sit on its hands and let the economy drift into recession.
“This is not good enough. New Zealanders deserve better than that. There needs to be an economic plan to diversify our economy and protect jobs, businesses and incomes.
"The time for spin and sophistry is over. National needs to snap out of its reckless complacency, step up and provide an economic vision that backs New Zealanders. That's what a responsible government would be doing at a time like this,” says Grant Robertson.