OCR hike shows need for spending cuts

“Today’s double shot to the official cash rate means more pain is on the horizon for mortgagees. 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,” says ACT Leader David Seymour.

“This is another hammer blow for many Kiwi households. Some of whom have had their homes destroyed by Cyclone Gabrielle and are now facing a hike in interest rates to boot. Despite this, Grant Robertson refuses to reprioritise Government spending to help pay for the cleanup.

“The Government 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.

“The recovery will cost billions of dollars. Robertson has already increased Government expenditure by $40 billion a year, it is going to get a lot higher.

“It’s not just mortgagees who are suffering. It is no coincidence that rents are at an all-time high, with the national median rent reaching $595 in January. Increases in rent are a flow-on effect of higher interest rates.

“The responsibility is now the Government’s. Kiwis can’t afford for the Government to put the country into more debt than necessary, they can’t afford a Cyclone Tax during a cost of living crisis, and they can’t afford increased interest rates because the Government refuses to check its 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.”

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