24 January 2008

High Interest Rate Symptom Of
Deeper Problems

New Zealanders are again confronted with the outrageous situation of the Reserve Bank Governor keeping New Zealand’s interest rate at the highest in the developed world, while others have responded more appropriately, says New Zealand First Leader Winston Peters.

“New Zealand has a distorted economy. While some indicators are sound, others, particularly our debt levels, current account deficit and interest rates are not, leaving us dangerously exposed to a volatile world market. What this situation is crying out for is greater liquidity, and yet what we have are further constrictions.

“The simple fact is that with the highest interest rates in the developed world New Zealanders are now spending huge portions of their incomes simply servicing debt. The net result of this is that Australian banks get rich, and our growth potential is further restrained. The incentives are all wrong.

“Unfortunately New Zealanders have a Clayton’s choice when it comes to economic management. On the one hand we have the aspirant, a currency speculator whose mates and former company are a big part of why the global economy is in turmoil. On the other we currently have a timid conservative approach and a refusal to break with the orthodoxy, even though our economy needs it.

“New Zealand First has a strong message on the economy this election year and it starts with the fundamentals such as the Reserve Bank Act and our tax system. Now is not the time for head in the sand conservatism or irresponsible speculation – but sound proven economic planning,” concluded Mr Peters.

ENDS

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