In today’s Finance and Expenditure Select Committee briefing, the Reserve Bank Governor was questioned by MPs about
Government spending and said, “We believe it is putting upward pressure on aggregate demand and hence inflation” in the
near-term.
He also emphasised the importance of the Government’s stated plans to dial back spending in future Budgets, saying this
would ease the impacts on inflation.
Adrian Orr says that Government spending is the Government’s business and the Reserve Bank is “a recipient of their
intentions.”
New Zealand Taxpayers’ Union spokesman Louis Houlbrooke says, “In other words, the ball is in the Government’s court: the more Grant Robertson dials
back spending, the less need there will be for prolonged high interest rates in the coming years. To put it another way, monetary policy needs fiscal friends.”
“Grant Robertson can blame inflation on international conditions all he likes – but it doesn’t absolve him from the
responsibility to ease domestic pressure on prices.”
“In his rush to allocate $5.9 billion of new operational spending in the Budget, he failed to examine ways to offset
this by cancelling low-priority initiatives. He needs to direct Government Ministries to closely examine what unspent
money can be clawed back from his COVID response projects.”
“With unemployment extremely low, we’d suggest starting with redundant make-work schemes like Jobs for Nature.”