Yesterday’s increase in the official cash rate (OCR) was expected and unwelcome::
In a massive blow to homeowners, out-of-control inflation has pushed the Reserve Bank into once again hiking the Official Cash Rate by a dramatic 50 basis points, National’s Finance Spokesperson Nicola Willis says.
“Today’s statement is yet more bad news for New Zealanders, confirming inflation is set to stay higher for longer, growth will be lower and interest rates will have to be hiked even higher to bring things under control.
“The cost of living crisis is hitting everyone across the country and it’s not going away anytime soon. Runaway prices are crushing household budgets. Rapidly rising interest rates are crushing mortgage-holders. Today’s statement confirms both these things are set to persist for many months ahead.
“Concerningly, today’s forecasts from the Reserve Bank suggest inflation now won’t return below 3 per cent until the middle of 2024 and won’t get back to its target midpoint until 2025.
“Instead of throwing up their hands and blaming international factors, the Government needs to take action to bring inflation under control. Broken immigration settings and runaway spending are choking off supply while overheating demand – a recipe for more inflation.
“The Reserve Bank acknowledged ‘labour shortages are a major constraint on business activity’, but the Government is still failing to fix our broken immigration settings. Businesses and consumers will continue to be squeezed by widespread skills shortages until that changes.
“The Government should adopt National’s five point plan to fight inflation – return the Reserve Bank to a single focus on price stability, reduce costs on businesses, remove bottlenecks in the economy, rein in government spending, and prioritise tax relief for workers.”
Labour MPs are always critical of National’s calls to rein in government spending, but the policy has public support:
The Taxpayers’ Union says that cuts to Government spending are a far better way to deal with the inflation crisis than the Reserve Bank of New Zealand hiking the Official Cash Rate – and the public agree. Kiwi voters understand the drivers behind inflation and the latest Taxpayers’ Union Curia Poll demonstrates that they want cuts to Government spending.
Responding to today’s OCR announcement, Taxpayers’ Union Executive Director Jordan Williams said:
“As part of this month’s Taxpayers’ Union-Curia poll, we asked New Zealanders if the Government should be increasing, decreasing, or maintaining spending levels in response to high inflation. The most popular response – 45% of respondents – was that Government should decrease spending.”
“Only 12% of respondents thought increasing spending was the right idea and 27% said spending should be kept the same.”
“Next time Labour MPs try to troll National Party leader Christopher Luxon with claims he will ‘cut spending’ Mr Luxon should say he will. This poll shows that it is precisely what most voters want him to do!”
“We also asked about tax cuts and 59% of voters support a temporary 10% reduction in overall income tax for all families to help with the increased cost of living.”
“As Grant Robertson recently acknowledged, tax relief is less inflationary than Government spending. Swapping out Government spending to leave more money in taxpayers’ pockets would both help with the costs of living and ease the pressure on inflation.”
“Something that the Beehive should take note of is that Labour voters are the most in favour of a temporary package for across-the-board tax relief!”
The results for the August Taxpayers’ Union Curia Poll can be found here – https://www.taxpayers.org.nz/inflation_polling
This government has demonstrated time and time again that more spending doesn’t always result in better outcomes.
Time and time again they’ve shown that they are not good managers of other people’s money.
The TU poll shows the public understand that and favour being able to keep more of their own money.