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Future OCR rises highlight National’s big economic fail

12 December 2013

Future OCR rises highlight National’s big economic fail

The signalled Official Cash Rate (OCR) hikes next year highlight National’s failure to build a strong, resilient, and jobs-rich economy, the Green Party said today.

In today’s Monetary Policy Statement (MPS), the Reserve Bank Governor said that the Bank will increase the OCR “as needed” in order to keep future average inflation near their 2 percent target.

“Rising interest rates will mean that New Zealand will lead the OECD hiking rates presenting a huge risk to our exchange rate,” said Green Party Co-leader Dr Russel Norman.

“Higher interest and exchange rates will effectively cost jobs, exports, and raise the cost of living for all those with mortgages.

“Once again, New Zealand’s economic recovery is betraying the same underlying structural weaknesses of the last one; National has materially failed to rebalance our economy away from borrowing and consumption towards savings, investment, and exports.

“National’s failure to address the Auckland housing shortage with a mixture of demand and supply-side measures are forcing the Reserve Bank to hike rates, hurting the real economy.

“National’s failure to introduce a comprehensive capital gains tax (excluding the family home) has meant property speculators will continue to be rewarded at the cost of the productive economy and all those seeking to buy their own home.

“National’s failure to set a strong pricing signal through the Emissions Trading Scheme has sent the wrong signal to private enterprise undermining the role of innovation while increasing the carbon footprint of our future economy.

“New Zealand is enjoying the highest terms-of-trade since 1973 yet we’re still running the third highest current account deficit in the developed world. If this is as good as it gets, we haven’t made the kinds of changes needed to secure our long-term prosperity.

“Even in these very best of economic times, we’ll see increasing levels of foreign ownership and control meaning we will continue to become ‘tenants in their own country’.”

ENDS

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