New Zealand Labour Party

Increasing risks as housing contagion spreads

Bill English’s failure to diversify the economy or control the housing bubble is increasing the risks to financial stability identified by the Reserve Bank Governor today, Labour Finance spokesperson Grant Robertson says.

“Graeme Wheeler must be getting sick of sounding like a broken record. In each recent financial stability report he says risks from the dairy and housing sectors are increasing. But each time Bill English ignores him.

“The facts are clear. The Auckland housing bubble has spread to Hamilton and Tauranga – so it now includes three of our five biggest cities. National has completely failed to deal with this – shown by just 100 homes being built under the failed Auckland housing accord.

“Bill English has failed to fix the Auckland housing crisis. At every step of the way National has ignored warning signs about the housing bubble in Auckland, and now he seems to be paralysed by his fear it will burst under his watch.

“But he’s got more on his plate than housing. Bill English also has to address the increasing risks from the massive drop in dairy prices, which will put many farmers under increasing pressure over two seasons.

“With dairy debt at $38 billion and a drought set to arise from El Nino, the alarm bells are ringing and, for once, Bill English must take action before a crisis hits.

“The Finance Minister needs to diversify the economy by supporting other sectors and regions so that if a dairy doomsday occurs, the economy will be strong enough to cushion the blow.

“The stark truth from today is Government inaction is fuelling risks to the economy. Graeme Wheeler is the messenger but he is not the solution. Bill English needs to take action now,” Grant Robertson said.