The Reserve Bank Governor has made it clear that the housing crisis is the primary reason he hasn’t cut the OCR and provided the stimulus needed for a sluggish economy, says Labour’s Finance spokesperson Grant Robertson.
“In March the Governor implied he intended to cut again. It’s clear the escalating housing crisis and fears of fuelling the fire has prevented him from doing so.
“Graeme Wheeler’s language today is extraordinarily blunt when the Governor historically speaks diplomatically. His statement said: ‘House price inflation in Auckland and other regions is adding to financial stability concerns. Auckland house prices in particular are at very high levels, and additional housing supply is needed’.
“That’s effectively a shot across the Government’s bow. Their failure is putting the financial stability of this country at risk.
“New Zealand needs to build more houses now. Labour will do this through our KiwiBuild programme that will see at least 100,000 affordable homes built.
“There are also less-than-glowing words for the economy from the Governor. He says it is being supported by high net immigration and the associated strength in house prices. According to the MPS, ‘growth per capita has been weak’, meaning Kiwis aren’t getting the benefits of growth.
“The Reserve Bank Governor has a mandate to keep inflation at 1 – 3%. It’s well below that now. He is being constrained from cutting the OCR to meet his target because the Government isn’t doing its job on housing.
“National has lost control of the housing crisis. The only way to get on top of it is to change the government, and implement Labour’s plan to build more houses and crack down on the speculators National has been happy to indulge,” says Grant Robertson.