It's the Govt driving inflation

9 December 2005

Crown accounts reveal it's the Govt driving inflation

"It's unbelievable that just one day after Reserve Bank Governor Alan Bollard notched up interest rates again, Treasury's figures confirm that it is actually rising government spending that is helping to drive up inflation," said Cameron Brewer, head of the Newmarket Business Association.

"Businesspeople will be sick to learn that the latest Crown accounts not only show an unnecessary surplus but that government expenditure for the four months to October is $1.2 billion more than at the same period last year.

"It's the Government that needs to take heed of Dr Bollard's unsustainable spending warnings. With Dr Cullen spending more and more, he's the biggest inflation driver out of anyone. Yet it's the business community, so heavily reliant on floating loans, that's getting hit every time Dr Bollard's ratchets up the Official Cash Rate.

"Business confidence is at a 17-year low with the boot going in increasingly harder every time interest rates go up. At the same time government spending just keeps on rising, with student loans and superannuation the next growth areas.

"It's plain wrong that my small to medium-sized businesses have to bite the bullet to control inflation. While in Wellington, the Government just keeps on writing bigger cheques. Further, it is incomprehensible that with record-low unemployment, welfare expenditure is continuing to increase at such a rapid rate," said Mr Brewer.

ENDS

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