New Zealand Labour Party

Governor acts while Finance Minister fiddles

The Reserve Bank is doing all the heavy lifting on the declining economy while Bill English appears to be sneaking off for a smoko break, Labour’s Finance spokesperson Grant Robertson says.

“Graeme Wheeler knows the economy is drifting. That’s why he’s cutting the OCR, despite knowing that risks adding to Auckland’s out-of-control housing market which he describes as ‘worrying’.

“While Bill English says there’s no need to change from Plan A, Graeme Wheeler is already bringing in Plan B, trying to stimulate the economy through lower interest rates.

“As the Reserve Bank notes: ‘Growth in business investment is estimated to have slowed over the middle of 2015. Slower growth in business investment is consistent with lower capacity pressure, export prices, and reduced business confidence’.

“The Reserve Bank has cut growth forecasts and expects unemployment to be around six per cent for the next two years. This is in stark contrast to National telling New Zealanders it would fall to four per cent.

“Graeme Wheeler isn’t a lone voice on this. Bank economists are ringing alarm bells and the Treasury has been sending briefing notes warning the Finance Minister the downside Budget scenario on the economy is turning into reality.

“Plunging dairy prices, exports falling, regional economies already going into recession and a housing market that threatens banking stability are big issues that are happening right now. They are beyond the remit of the Reserve Bank. It’s the Finance Minister that has to deal with them.

“The message from Graeme Wheeler on Auckland housing is stark. The Bank has done what it can to manage demand. Increasing supply is critical and that falls at the feet of the Government.

"But Bill English continues to insist nothing needs to be done. He has reduced himself to being a spectator on the sidelines of the economy when Kiwis need him on the field,” Grant Robertson says.