Another kick in the guts for growth...

7 June 2007

Media Release

“Another kick in the guts for growth….”

Responding to the Reserve Bank announcement raising the Official Cash Rate (OCR) to 8%, Michael Barnett, Auckland Chamber of Commerce CEO noted that part of the justification was that the rise in dairy sector incomes will add to inflation pressures.

“Once again we are told that the more successful we are, the more we will be punished.”

Meanwhile the continuing high government sector spending gets only the briefest of mentions, when clearly this sector going back over the last 2-3 years is the main inflation culprit.

“Blaming inflation on growth success shows we have a deep seated problem in the fundamentals of the economy. On the one hand Government wants businesses to grow and increase wealth, but when businesses do so the Reserve Bank stifles that success and blames the very growth we want for adding to inflation.”

“We should be encouraging and rewarding export-led growth – not constraining it. We should be hammering central and local government to keep price increases in non-productive areas like rates and water to below inflation – not passively accepting these rises.”

This is the third rise since March. Is this what he will continue to do until growth is squeezed out of the economy? “What we are doing is not working. It’s time the Government and Reserve Bank inquiry launched last year into a better way to encourage growth and control inflation was given some urgency.”

ENDS

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