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

 

Monetary Policy Needs Mates

27 October 2005

Monetary Policy Needs Mates

“The Reserve Bank’s task of containing inflation is being made more difficult by other government policies”, Roger Kerr, executive director of the New Zealand Business Roundtable, said today. He was commenting on the increase in the Official Cash Rate to 7.0 percent.

Mr Kerr said that the process of reducing inflation in the 1990s was helped by such factors as stronger fiscal discipline, deregulation to make markets more competitive, corporatisation and privatisation that increased efficiency, a freer labour market that limited across-the-board wage increases, and tax reductions.

Inflation – an ongoing increase in the general level of prices – is a monetary issue, but the accumulated effects of other government policies are putting pressure on costs and prices and exacerbating the imbalances that concern the Bank.

Key drivers include:

- very high rates of increase in government spending;

- cost-increasing employment law changes, such as holidays legislation (and the proposed increases in the minimum wage will add to wage pressures);

- the expanded role for local government, which is generating high rate increases;

- poor infrastructure policies;

- the Resource Management Act and urban intensification policies that are putting pressure on house prices; and

- the rising tide of business regulation.

“To help the Reserve Bank in curbing inflation, other policies should be made more consistent with a firm monetary policy”, Mr Kerr said.

“Priorities include reductions in baseline government spending to offset new commitments, reductions in taxation (and the abandonment of the carbon tax), constraints on local government, and a broad review of business regulation similar to that being undertaken by the Australian government.

“The Reserve Bank is doing too much of the heavy lifting and the unbalanced policy regime is threatening economic growth. The Bank’s criticism of household spending, borrowing and lending is misplaced – it should not be blaming the private sector. Rather, while operating a non-inflationary monetary policy, it should be calling for government action to support its role”, Mr Kerr concluded.

ENDS

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop 3.0: How You Can Help Scoop’s Evolution

We have big plans for 2018 as we look to expand our public interest journalism coverage, upgrade our publishing infrastructure and offer even more valuable business tools to commercial users of Scoop. More>>

Having A Cow? Dairy Product Prices Slide For Fourth Straight Auction

Dairy product prices fell at the Global Dairy Trade auction, retreating for the fourth straight auction amid signs of increased production... Whole milk powder fell 2.7 percent to US$2,778 a tonne. More>>

ALSO:

Statistics: Butter At Record $5.67/Block; High Vegetable Prices

Rising dairy prices have pushed food prices up 2.7 percent in the year to October 2017, Stats NZ said today. This followed a 3.0 percent increase in the year to September 2017. More>>

ALSO:

Science: New Research Finds Herbicides Cause Antibiotic Resistance

New University of Canterbury research confirms that the active ingredients of the commonly used herbicides, RoundUp, Kamba and 2,4-D (glyphosate, dicamba and 2,4-D, respectively), each alone cause antibiotic resistance at concentrations well below label application rates. More>>

ALSO:

CO2 And Water: Fonterra (And Dairy NZ)'s Environment Plans

Federated Farmers support Fonterra’s bold push to get to zero emissions of CO2 on the manufacturing side of the Co-operative, both in New Zealand and across its global network. More>>

ALSO:

Fisheries: Decision To Delay Monitoring ‘Fatally Flawed’

Conservation group representatives say a decision by the new Minister of Fisheries, Stuart Nash, to delay implementation of camera monitoring of fishing efforts in New Zealand is ‘fatally flawed’. More>>

ALSO:

 
 
 
 
 
 
 
 
  • Bill Bennett on Tech