David

PARKER

Spokesperson for Finance

6 December 2012 MEDIA STATEMENT

About time: A Small Chink In Monetary Orthodoxy

Reserve Bank Governor Graeme Wheeler’s admission today that he is negotiating the use of macro-prudential tools shows the Government is finally conceding that its orthodox monetary policy needs to change, says Labour’s Finance spokesperson David Parker.

“For years National has defended its orthodox monetary policy as ‘world’s best practice’. But the world has moved on since the financial crisis and the old orthodoxies are changing.

“National now finally appears ready to consider some changes. It’s about time too.

“This move is partly due to pressure from opposition parties, including three years of agitation by Labour.

“Graeme Wheeler said today that the Reserve Bank and the Government are negotiating a new memorandum of understanding that would include macro-prudential tools, such as loan-to-value ratios, to lean against asset bubbles and reduce reliance on the interest rate lever.

“The Government has decried changes to its monetary policy – one of the most orthodox in the world – as voodoo economics. This is despite a chorus of calls for change from exporters, businesses, opposition parties and some economists.

“Now, belatedly, it appears to have recognised that the world has moved on.

“These changes are far from all that is necessary. The biggest problem is still the primacy given to inflation targeting ahead of other important matters of economic management like employment and the exchange rate.

“Changes are needed to the Reserve Bank Act to ensure the Bank can give proper weight to these other matters which are crucial to exports and jobs.”

ENDS

© Scoop Media

Mighty River: 'Mum And Dad’ Investors Myth Busted

Green Party research, confirmed by Treasury, shows that half of the shares in Mighty River Power that National sold to retail investors went to just 13,000 people and that 10 percent of the retail shares went to just 400 wealthy people and organisations, Green Party Co-leader Dr Russel Norman said today.

The sale of Mighty River Power saw 113,000 retail investors, referred to as ‘mum and dad’ investors by the National Government, buy 26.9 percent of the company. Analysis by the Greens and Treasury shows that half of those shares were, in fact, purchased by fewer than 13,000 people who bought an average of nearly $35,000 worth of shares...

“The truth is that 98 percent of New Zealanders bought no shares at all. Half the retail shares went to just 0.3 percent of the population, and a tiny group of just 400 wealthy individuals and organisations got 10 percent of the retail shares. More>>