Bill English MP
National Party Finance Spokesman

8 March 2007

Homeowners tighten belts while Labour lets loose

“Kiwi homeowners will continue to pay more on their mortgages for longer as Labour escalates its spending campaign in the lead-up to the next election,” says National Party Finance spokesman Bill English.

The Reserve Bank Governor has highlighted Labour’s ‘expansionary fiscal policy’ as one of the big factors driving higher interest rates. Our rates are the highest in the industrialised world.

“Homeowners are being asked to tighten their belts so Michael Cullen can let his out by a couple of notches,” says Mr English.

The Reserve Bank Monetary Statement issued today says ’fiscal policy is expected to become more expansionary over the next few years as Government spending increases and revenue growth slows.’

It also says ‘recently, fiscal policy has become more stimulatory. Government spending (as a share of output) rose significantly in the 2006 fiscal year, and is expected to record another significant rise in the 2007 fiscal year, outpacing growth in nominal GDP.’

Mr English says Dr Cullen desperately needs to direct his attention towards improving the quality of government spending.

“My fear is that Helen Clark and Michael Cullen will sacrifice interest rates and homeowners, as they inevitably reaches deeper into taxpayer pockets in the run up to the next election.

“Labour’s ‘expansionary’ spending has helped push interest rates up and is set to keep interest rates higher for longer.”

ENDS

Attached: Graphs – Monetary Policy Statement, March 2007 – 1 page.
Graphs – Monetary Policy Statement, March 2007 (PDF)

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