17 August 2004
Too Much Growth - Never!
The Bank of New Zealand’s alarmist comments about the pitfalls of growth send a baffling message to business.
The Bank of New Zealand’s latest claim that New Zealand’s economic growth rate is too high to be sustained if we want to
stop inflation getting out of control, flies in the face of perpetual calls by successive governments and bankers for
New Zealand to embrace growth.
It also offers no practical answers for how businesses, and New Zealand as a whole, are expected to balance the need for
growth against the desire to dodge the looming threat of inflation.
“I would have thought that the banking industry is in the best position possible – with its access to financial
intelligence and research – to come up with a serious proposal to sustain high growth and get New Zealand’s economic
performance back up to speed with Australia,” said Auckland Chamber of Commerce CEO Michael Barnett.
“Instead, the BNZ seems to be locking in an anti-growth mentality by citing our recent period of high growth – estimated
at 4.3% for the June year 2004 – as creating a major problem for the Reserve Bank.
The BNZ’s concludes its latest weekly overview: “Unless New Zealand’s rate of economic growth slows rapidly shortly, or
the resource base expands sharply (very unlikely), or productivity growth jumps (no, its falling) then the Reserve Bank
may have to aggressively hike interest rates to stop inflation getting out of control.”
Mr Barnett: “My challenge to the BNZ and other bankers is to tell the country that if what we are doing is not
sufficient to provide the sustainable high growth we need to catch up with Australia’s living standards, then tell us
what is – be solution providers, not messengers of doom.”
It is simply unacceptable that every time the business community responds to calls from successive governments and
bankers to be growth-led, they are then kneecapped when they deliver results.
ENDS