“Today’s increase to the Official Cash Rate (OCR) is business as usual, the only problem is that business is much better across the Tasman,” says ACT Leader David Seymour.
“Today’s increase to the Official Cash Rate (OCR) is business as usual, the only problem is that business is much better across the Tasman,” says ACT Leader David Seymour.
“Australia’s reserve bank this week decided to halt increases to their own OCR, which sits at 3.6. In contrast New Zealand’s has been increased to 5.25.
“Australia seems to be getting things under control, they’ve stopped hiking and the average floating interest rate there is 6.09 per cent. In New Zealand floating interest rates are about 8 per cent and show no signs of decreasing soon.
“Over half of mortgagees will re-fix their mortgage this year. The average mortgagee who fixed for two years in April 2021 and is looking to fix for another two years will be paying another $318 per week. Someone in Auckland, where mortgages are higher, is looking at another $399 per week.
“Mortgages are just one aspect of the economic pain that is coming. Something has to break if the reserve bank continues with these hikes and the next thing will be job losses. There are already job losses occurring at an increasing rate, in the last week Today FM, Sky, Xero have all shed hundreds of employees and the Reserve Bank is predicting another 66,000 job losses across the next two years.
“While I’m sure she won’t touch on it in her valedictory, this is part of Jacinda Ardern’s legacy. Quarantining an island nation from COVID may have won her global plaudits and delayed the outbreak in New Zealand, but now the truth of the lie is evident. The COVID response was fuelled by cheap credit and wasteful spending, and New Zealanders will feel the consequences for a long time to come in the prices they pay for goods and services, their mortgage repayments, and the lack of prosperity and wage growth in the economy.
“The Government’s economic mismanagement just widens the divide between New Zealand and Australia even further. No wonder thousands of frontline workers are leaving for cheaper interest rates and higher wages.
“The onus is on Grant Robertson to pull back on the Government’s spending or Kiwis will continue to bear the brunt of price rises, he needs to offer the Reserve Bank a lifeline. The Governor has often said ‘monetary policy needs friends.’
“Instead, Adrian Orr has been left with an impossible choice. He either hikes the OCR and makes life harder for mortgagees, or he puts the brakes on and inflation hangs around stronger for longer. Either way Kiwis lose until the Government can cut wasteful spending.
“ACT’s Alternative Budget shows how expenditures could be reduced by $7.2 billion without touching any frontline services. This can be done with measures including an end to corporate welfare and returning the number of bureaucrats to the 47,000 Labour inherited. That is what is needed to stop the pressure being heaped on Kiwi households.”