“Today more pain has been heaped on Kiwis already struggling with a cost of living crisis, it could have been avoided if the Government had disciplined its spending,” says ACT Leader David Seymour.

“Adrian Orr told the Government he needed ‘more targeted fiscal policy’ to help fight inflation. Finance Minister Grant Robertson turned around and increased spending with a record $5.9 billion operating allowance. Adrian replied by putting up everyone’s mortgage.

“Today’s 50 basis point rise in the Official Cash Rate (OCR) takes it to a seven year high of 3 per cent.

“The Reserve Bank reports that every one percentage point increase in the OCR leads to a 0.8 percentage point increase in mortgage rates. This means today’s hike alone amounts to more than $1,600 a year extra in interest payments for the average mortgage, this is on top of the $6,787 increases those on floating rates have already endured since the Reserve Bank started acting in October last year.

“It didn’t have to be this way. Our current situation is the result of dual failures from both Grant Robertson and the Reserve Bank.

“Kiwis are suffering from a perfect storm of reduced productivity due to border settings, and Labour’s spending addiction which are driving inflation.  

“Robertson couldn’t resist the temptation to flood New Zealand with oceans of cheap printed money. Now that ocean of printed money is washing up as inflation at the pump, the checkout, and the cost of housing.

“Meanwhile because of its overshoot in printing money over the past two years, the Reserve Bank is now in the impossible position of chasing inflation from behind. It must raise interest rates, and therefore mortgage rates, just as families are facing record prices for everything they buy.  

“As released in our cost of living document, ACT says we need to make our society productive again by tackling the labour shortage that is reducing production and pushing up prices. We’d do this by dumping the labour market test, industry specific wage requirements, and transfer restrictions. Foreign workers should be able to work for accredited employers so long as they are employed consistent with New Zealand law.

“We’d also restore monetary policy credibility to the Reserve Bank by returning its mandate to solely taming inflation, allowing the appointment of monetary policy experts from New Zealand and abroad, and applying stricter scrutiny in future before granting Crown indemnities.

“ACT’s Alternative Budget for Real Change also shows how the Government could reduce spending without touching any frontline service, and then deliver significant tax cuts to middle income New Zealanders.

“Inflation is at a 31-year high and Kiwis are being squeezed from every direction. The only adequate response is a return to rational economics.”

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David Seymour