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


Large Scale Squandering By The Reserve Bank

The Reserve Bank is embarking on a scheme that will squander $28 billion, according to Don Richards, the National Spokesperson for Positive Money New Zealand (PMNZ).

Through its so-called Funding for Lending programme, the Reserve Bank will provide $28 billion of additional funding to commercial banks to bring down interest rates — rates which are already at a historical low.

The problem, as a former Reserve Bank manager Michael Reddell points out, is that the banks are not funding-constrained. Banks are awash with central bank provided liquidity as total settlement cash balances were about $7 billion pre-Covid and are now about $24 billion, according to Reddell.

He believes that the banks will not use much of the Funding for Lending money anyway and will probably sit on it.

This seems to be a very expensive transfer of money for a reduction in a fraction of a percentage point on the interest rates. The lower interest rates will only further fuel the overheated property market, making housing even more unaffordable for new home buyers.

“The Reserve Bank needs to stop giving money to the banks as the money is not making its way into the productive economy,” says Richards.

“We need to eliminate the middle man and provide the funding directly into the job rich sections of the economy. As an example of what has worked, the wage subsidy cost half of what the Reserve Bank will be giving to the banks and yet it provided a direct and ongoing stimulus to the economy.”

Another option could be to provide the money to the Government to spend on infrastructure projects such as roads, schools and housing. The first Labour Government did something similar during the Great Depression in the 1930s and that got us out of a deeper financial hole than the one we are in currently in.

“So rather than provide $28 billion for the banks to sit on, let’s try something that has proven to have worked,” Richards says.

© Scoop Media

Business Headlines | Sci-Tech Headlines


TradeMe: Property Prices In Every Region Hit New High For The Very First Time

Property prices experienced their hottest month on record in December, with record highs in every region, according to the latest Trade Me Property Price Index.\ Trade Me Property spokesperson Logan Mudge said the property market ended the year with ... More>>

Motor Industry Association: 2020 New Vehicle Registrations Suffer From Covid-19

Chief Executive David Crawford says that like some other sectors of the New Zealand economy, the new vehicle sector suffered from a case of Covid-19. Confirmed figures for December 2020 show registrations of 8,383 were 25% ... More>>

CTU 2021 Work Life Survey: COVID And Bullying Hit Workplaces Hard, Huge Support For Increased Sick Leave

New data from the CTU’s annual work life survey shows a snapshot of working people’s experiences and outlook heading out of 2020 and into the new year. Concerningly 42% of respondents cite workplace bullying as an issue in their workplace - a number ... More>>

Smelter: Tiwai Deal Gives Time For Managed Transition

Today’s deal between Meridian and Rio Tinto for the Tiwai smelter to remain open another four years provides time for a managed transition for Southland. “The deal provides welcome certainty to the Southland community by protecting jobs and incomes as the region plans for the future. The Government is committed to working on a managed transition with the local community,” Grant Robertson said. More>>


OECD: Area Employment Rate Rose By 1.9 Percentage Points In The Third Quarter Of 2020

OECD area employment rate rose by 1.9 percentage points in the third quarter of 2020, but remained 2.5 percentage points below its pre-pandemic level The OECD area [1] employment rate – the share of the working-age population with jobs – rose ... More>>

Economy: Strong Job Ad Performance In Quarter Four

SEEK Quarterly Employment Report data shows a positive q/q performance with a 19% national growth in jobs advertised during Q4 2020, which includes October, November and December. Comparing quarter 4, 2020, with the same quarter in 2019 shows that job ad volumes are 7% lower...More>>

NIWA: 2020 - NZ’s 7th-warmest Year On Record

The nationwide average temperature for 2020, calculated using stations in NIWA’s seven-station temperature series which began in 1909, was 13.24°C (0.63°C above the 1981–2010 annual average). New Zealand’s hottest year on record remains 2016, when... More>>

Quotable Value New Zealand: Property Market Set To Cool From Sizzling To Warm In 2021

Nostradamus himself could not have predicted the strange series of events that befell our world in 2020 – nor the wild trajectory of New Zealand’s property market, which has gone from “doom and gloom” to “boom and Zoom” in record time. Even ... More>>