New Zealand Labour Party

OCR cut would be vote of no confidence in economy

If Reserve Bank Governor Graeme Wheeler cuts the OCR tomorrow it would show that, despite his loudly-voiced concerns about fuelling the housing market, the stuttering economy is now a bigger concern, says Labour’s Finance spokesperson Grant Robertson.

“Bill English and John Key continue to claim the economy is doing well but they ignore stagnant growth per person and a stubbornly high dollar that is hampering exporters. The truth is the economy is being propped up by record population growth and housing speculation. And the Governor knows it.

“Despite his fears of an OCR cut pouring fuel on the property fire, the Governor looks likely to lower interest rates tomorrow morning. That shows he is deeply concerned about the economy.

“A cut will require action from the Government on two fronts – housing and the economy.

“Bill English must take action to support growth in the productive sector of the economy and increase capital spending to back the Governor’s actions. Mr Wheeler can’t do it all on his own.

“An OCR cut will spur on speculators and push up house prices. Mr Wheeler has now done all he can to rein in the housing market, by increasing LVRs and preparing to bring in debt to income ratios. It’s over to National to fix the crisis.

“It’s essential that National takes on Labour’s comprehensive housing plan to build 100,000 affordable homes, crack down on speculators and close loopholes like negative gearing.

“The sad truth is this bystander Government will do nothing to support the Reserve Bank. The only way to increase growth per person and get the housing crisis under control is to change the Government,” says Grant Robertson.