Labour has contributed to inflation


John Armstrong points out that it wasn’t the best PR for ministers to arrive at parliament in the new crown BMWs as voters are reeling from the sharp rise in the price of groceries and petrol.


Ministers talked of how Labour had lifted real household incomes, while stressing increased global commodity prices are beneficial to the New Zealand economy.

That was cold comfort to households where budgets are stretched by the combination of rising consumer prices and higher mortgage interest rates.

Neither development is Labour’s fault.



He is right that Labour can take no credit for the rising world price of commodities but they can be blamed for the pressure on interest rates. One of the drivers of inflation has been Government spending and that has forced Dr Bollard to lift and then maintain interest at the highest level in the OECD.


Taking more tax than it needs, using it to increase the bureaucracy rather than improving services and redistributing it for political gain rather than the greater good has done little or nothing for productivity and contributed a lot to inflation.

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