Bernard Hickey’s view, worth highlighting this quote…
My view: The Reserve Bank is just a third of the way through its programme and mortgage rates could fall to just 1.5% next year, unleashing another 20-30% rise in house prices. That is politically unsustainable at a time when property owners just got $100b richer through the value of their homes and Jacinda Ardern is refusing to spend $5.2b more to raise benefits more because she says the Government is short of money.
The Reserve Bank should be directly funding a $100b programme of Government infrastructure spending over 10 years to massively improve housing affordability and address climate change by flooding the housing market with 100,000 new homes and building the public transport and water infrastructure needed to reach carbon net zero by 2050.
The post-1989 era of focusing the Government on having an independent inflation-targeting central bank and limiting the size of Government (to around 30% of GDP in NZ) by targeting net debt of 20% of GDP is politically unsustainable when the fallout of Covid-19 is hitting young renters, Māori, Pacifica and women hardest, while property and share owners celebrate hundreds of billions of unearned and untaxed wealth.
These should be bi-partisan targets where independent authorities (RBNZ, Kāinga Ora, NZTA and the Climate Commission) pull the infrastructure, tax and spending levers to achieve that.
We should be targeting just a 10th of poor families spending more than 30% of their income on housing (it trebled to 55% over the last 30 years) and getting on track for net carbon zero by 2050.