John Key MP
National Party Finance Spokesman
6 April 2006

Housing study confirms futility of Cullen’s ideas

The Reserve Bank-Treasury study on cooling the housing market confirms National’s view that Michael Cullen’s instinct for intervention was doomed from the start, says National Finance spokesman John Key.

“The options to intervene in the housing market were always going to be costly and difficult to implement,” says Mr Key.

“Reserve Bank Governor Alan Bollard already knew none of the measures looked at would work, because he said so in a January 2004 speech.

“This shows that the Finance Minister’s move last year to ask the Reserve Bank and Treasury to look at ways to dampen the domestic housing market was futile and was simply a sabre-rattling exercise.

“Dr Cullen will be gutted by the study, because his own officials have told him that his plans for intervening in the housing market won’t work.

“There was never anything realistic that could be done. His talk about options to intervene was nothing more than empty propaganda rather than serious policy development.

“The report does contain a coded warning for housing investors that Inland Revenue may toughen up on enforcement of capital gains from property resale.

“But overall, this report caps what has been another rotten week for a Minister who was told by his boss via the media this week that his days in the job are numbered.”

ENDS

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