14 July 2002

Jim Anderton today said that the Kiwibank has again highlighted the need for economic policy that promotes growth and keeps interest rates low.

“It is obvious that the recent announcement from Kiwibank that it is not putting up home mortgage interest rates is good news for New Zealanders. A 1% rise in mortgage rates adds about $52 per month to the expenses of an average $100,000.

“Substantial rises in interest rates, and the threat of them, choke off economic growth in New Zealand, because it reduces investment and raises the exchange rate – and this undermines our exports.

“New Zealand needs policy aimed at stable and low interest and exchange rates which reflect the strength of the real economy. Export-led growth in many other economies has not led to increased inflation, and this should be our goal.

“A balanced economic policy would support the regions in agricultural growth, particularly where further value could be added in New Zealand to primary products.

“For this reason, The Progressive Coalition is arguing for changes to the Reserve Bank Policy Target Agreement. But it would also support policies for export-led growth to keep inflation down and the regions growing.

“Sustained annual GDP growth of 4%, is a key objective of The Progressive Coalition’s economic policy.

“Since the Kiwibank overseas owned banks have been forced to respond. The result has been lower interest rates, lower fees and better service. More of the industry’s profit will be retained in New Zealand. This will benefit all consumers, as well as the country.

“Strong competition in the New Zealand banking sector helps to keep down interest rates and shows the success of government policy in setting up the Kiwibank” said Jim Anderton.

Ends

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