National will hate this. Their version of monetary policy is that whenever inflation gets too hot, they leave it to the Reserve Bank to bang up the Official Cash Rate.
The result: high interest rates by international standards, higher mortgage payments, and an over-valued currency that forces our exporters out of business and gets our businesses undercut by artificially cheap imports at home.
The only people who get rich out of that the are overseas lenders.
Labour’s got a smarter approach.
We’ll broaden the Reserve Bank’s objectives so that it’s got to try to help balance our current account and contribute to a healthier economy – rather than myopically focusing on inflation alone.
We’ll make sure the government plays its part by tackling the sources of inflation. KiwiBuild, Capital Gains Tax, and restrictions on foreign investment in housing will stabilise house prices. NZ Power will bring power prices down. And KiwiAssure will keep the insurance market in check. Together, those three sectors account for nearly half the inflation we see today.
Finally, we’ll give the Reserve Bank more tools for controlling inflation without hiking interest rates. The biggest of these is variable Kiwisaver. When inflation needs dampening, rather than put up interest rates, we’ll let the Kiwisaver contribution rate be adjusted – that means you’ll be putting more money in your savings, rather than overseas.
So that’s Labour’s plan: we’ll deliver lower mortgage rates, a fair exchange rate, and more jobs. The people who oppose that will have to explain why it’s fair to hurt families and businesses to makes bankers rich.