Some policy areas are supposed to be kept clear of party politics.
Labour trampled all over the convention that consitutional matters were in that category with the Electoral Finance Act. Now they look set to do it again with monetary policy.
The Government is signalling a change in the way the Reserve Bank fights inflation in what could mark the first major shift away from the bank’s focus on interest rates as its sole weapon.
It is understood the Government has decided to give up on seeking consensus with National over possible changes and will go it alone.
That could see it campaigning on changes to the policy targets agreement between the finance minister and the governor of the bank – or even changes as radical as amendments to the Reserve Bank Act itself.
I am concerned because Labour:
* is abandoning a bi-partisan approach to monetary policy;
* has not learned from the EFA debacle that they should not play politics with matters which need to have at least bipartisan and preferably cross-party support.
* has made no effort to cut back their own profligate spending of taxpayers’ money which has made a significant contribution to inflation.
* is prepared to put short term politics before the long term interest of the country by abandoning the fight against inflation.
Inflation is theft which hits the poorest hardest.
There may be better ways to fight it than interest rates – but that should be determined by cross-party concensus not by petty party politics in a desperate bid to turn the polls around.
The Visible Hand In Ecnomics is troubled by this and is calling for submissions on it.
Hat Tip: Adam Smith