The OCR cut today shows National needs to step up and support the Reserve Bank to ensure the country is able to handle ‘the increasing risks to the economy’, says Labour’s Finance spokesperson Grant Robertson.
“The cut to the OCR shows the economy is in need of stimulus, with growing concerns about dairy, the international economy, and the housing market. Current growth is being driven by short-term, non-sustainable factors like migration. As the Reserve Bank said, ‘Growth per person hasn’t been as strong as it might have been’. In fact it has been close to zero over the last year.
“Graeme Wheeler identified just four areas driving the economy: inward migration, tourism, a pipeline of construction activity and now accommodative monetary policy. These are short-term and out of the Government’s control.
“There isn’t the kind of sustainable growth in high-value industries that will boost growth and create jobs here in New Zealand. It’s driven by temporary factors such as construction in Christchurch and people landing at airports for the long or short-term.
“Bill English has been far too complacent for far too long, especially in ignoring the looming risks to dairy for two years. As the Governor said: ‘There are many risks to the economy’. Mr English has to take this seriously.
“Hopefully the OCR cut will encourage investment and growth, but the move needs support from the Government to help deliver long-term economic development.
“The domestic risks of serious weaknesses in the dairy sector and pressures in the housing market have been a feature of Reserve Bank announcements for a long time now. The Government hasn’t been able to do anything to address this.
“Today’s cut came as a surprise to everyone. Hopefully it will shake the Government from its slumber,” says Grant Robertson.