Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Reserve Bank Should Challenge Govt Spending

25 October 2005

Case is building for Reserve Bank to challenge Government spending…

Michael Barnett, Auckland Chamber of Commerce CEO said that while it looks likely that the Reserve Bank will tighten interest rates later this week, it should not be accepted as inevitable.

“The prime factors that have pushed inflation above the Reserve Bank’s 3 percent benchmark are higher petrol prices and increased government spending across a number of fronts.”

Government has promised increased spending on everything from student loans, holiday pay, minimum wage, and superannuation. Also not helping to keep inflation in check are the increased costs of complying with government regulations and actions by local authorities to put up rates – there are very few who haven’t lifted rates by less than 5 percent.

“While it is understandable that the Reserve Bank - whose sole job is to keep inflation within a 1-to-3 percent guideline – might be keen to tighten interest rates when it makes the call on Thursday, the medicine might be easier to take if it sharpened its call on Government to reign in its expenditure,” said Mr Barnett.

“With some signs that international petrol price rises may be easing and a government commitment to keep its own expenditure in check, a rise in interest rates should not be taken for granted.”

Not helping the case for business to improve productivity and lift earnings is that New Zealand’s interest rates are already among the highest in the developed world.

“It is a hugely blunt instrument and contradictory that on one side the Reserve Bank has little choice to keep inflation in check other than to hit business with higher interest rates, while at the same time government is urging business to do more to increase growth and export earnings.”


© Scoop Media

Business Headlines | Sci-Tech Headlines


Media Mega Merger: StuffMe Hearing Argues Over Moveable Feast

New Zealand's two largest news publishers are appealing against the Commerce Commission's rejection of the proposal to merge their operations. More>>


Approval: Northern Corridor Decision Released

The approval gives the green light to construction of the last link of Auckland’s Western Ring Route, providing an alternative route from South Auckland to the North Shore. More>>


Crown Accounts: $4.1 Billion Surplus

The New Zealand Government has achieved its third fiscal surplus in a row with the Crown accounts for the year ended 30 June 2017 showing an OBEGAL surplus of $4.1 billion, $2.2 billion stronger than last year, Finance Minister Steven Joyce says. More>>


Mycoplasma Bovis: One New Property Tests Positive

The newly identified property... was already under a Restricted Place notice under the Biosecurity Act. More>>

Accounting Scandal: Suspension Of Fuji Xerox From All-Of-Government Contract

General Manager of New Zealand Government Procurement John Ivil says, “FXNZ has been formally suspended from the Print Technology and Associated Services (PTAS) contract and terminated from the Office Supplies contract.” More>>