Reserve Bank and Labour tag-team government

The language was polite, but the message was clear.

The Reserve Bank thinks the Government could do more to take the heat off the property market.

The tax system and migration are two areas that Deputy Governor Grant Spencer says the Government needs to address.

In a speech to the New Zealand Institute of Valuers, he warned of the dangers a severe correction in the housing market could pose to the financial system and the broader economy.

He said the Reserve Bank is working on new policies to reduce demand but also said the Reserve Bank can’t do anything about supply.

That is where the Government comes in.

The supply of land, costly planning and consent processes and inefficiencies in the building industry are all factors that are being addressed or need to be.

But Mr Spencer also singled out taxes and migration as two areas that need to be looked at.

In general, National’s plan has been to leave things alone as much as possible. But the Reserve Bank are losing their nerve. Labour have, of course, jumped on the bandwagon. 

Labour’s finance spokesman, Grant Robertson, interpreted that as an appeal to the Government.

“In the diplomatic wording of the bank, that is a shot across the bow to a Government that isn’t doing anything tangible,” he said.

“With house prices skyrocketing by the day, the Government needs to take action on both supply and demand, and take control of the situation.”

The Greens’ finance spokeswoman, Julie Anne Genter, says Mr Spencer’s comments indicate the bank thinks the Government could be doing much more than it is.

“When the Reserve Bank says a broad policy response is needed, it’s pretty clear it wants to Government to do more to help,” she said.

The markets like this pressure. The dollar shot up after the Reserve Bank speech. Have National left it too late?


– Newshub

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