National’s failure to deal with the housing crisis in New Zealand is once again being exposed by the Reserve Bank today, in a scathing assessment of the Government’s response, says Labour Finance spokesperson Grant Robertson
“Governor Wheeler is clearly worried about the housing market. The Reserve Bank says that ‘vulnerabilities in the Auckland housing market continue to increase and spread to the rest of the country’.
The latest global dairy price forecast shows that New Zealand dairy farmers will not reach a break-even payout before 2019 at the earliest, and will not reach the dairy price factored into this year’s Budget until after 2025, Labour’s Finance spokesperson Grant Robertson says.
“The calculations made by the Government in this year’s Budget are based on OECD forecasts, including the price for whole milk powder returning to US$3,400 a metric tonne in 2018.*
Today’s economic assessment from the Reserve Bank highlights the danger to the New Zealand economy from a National government that is recklessly complacent in the face of a housing crisis and a struggling export sector, Labour’s Finance spokesperson Grant Robertson says.
“The Reserve Bank is paving the way for further cuts to the Official Cash Rate as it struggles to bring the exchange rate to a more sustainable level, and to provide some impetus to lift inflation back towards its mandated level.
The slump in dairy prices that has seen farm prices drop to their lowest level since 2012 and down a third from their peak in 2014 will be of concern to farmers, banks and our overall financial stability, Labour’s Finance spokesperson Grant Robertson says.
“Two years of below break-even pay-outs have been tough for dairy farmers, and the impact is now spreading to the value of their farms. Dairy farm prices have dropped to their lowest level since July 2012, and are down 33 per cent from their peak in October 2014.
The proposal by the Reserve Bank to tighten loan to value ratios for investors shows they are prepared to do their bit to crack down on speculators, while National is still stuck in denial mode, Labour’s Finance spokesperson Grant Robertson says.
“The Reserve Bank have followed through on the indication of tighter limits for lending to people buying their second or more property. This is the right thing to do, as nearly one in two purchases in Auckland have been made by speculators, and there are signs of the rapid price increases spreading to other regions.
John Shewan’s report into foreign trusts is a rebuke to John Key and the National Party who have protected an industry that has damaged New Zealand’s reputation, says Labour’s Finance spokesperson Grant Robertson.
“Three years ago the Inland Revenue Department warned National Party ministers that New Zealand’s reputation was being damaged by our loose and secretive foreign trust regime. The foreign trust industry used their influence through John Key to stop the IRD’s work in this area.
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.
Bill English has admitted the dairy industry is in the Reserve Bank’s severe scenario which could lead to almost half of dairy farmers defaulting on their loans, says Labour’s Finance spokesperson Grant Robertson.
“On Morning Report Bill English said the dairy industry is in an extreme or severe scenario, following the fall in Fonterra’s payout to below $4. In the Reserve Bank’s modelling that could lead to 44 per cent of farmers defaulting on their loans. That’s 5,000 farmers and a huge flow-on effect to their communities.