“Yesterday’s shock OCR double hike sends a very clear message to Grant Robertson that he hasn’t been doing his part to tackle inflation. The question is whether he will finally learn?” Asks ACT Leader David Seymour.

“This is the last hike prior to the Budget. It’s a shot across the bow and a warning to Robertson that he needs to reign in his worst instincts and stop spending.

“Most countries were later than New Zealand to start hiking interest rates and faster to get things under control. The Reserve Bank is in the uncharted territory of having to inflict double shots when the rest of the world is stopping. The reason for this? The Government has refused to change a single aspect of its approach to spending.

“Over half of mortgagees will re-fix their mortgage this year. The average mortgagee who fixed for two years in April 2021 and is looking to fix for another two years will be paying another $318 per week. Someone in Auckland, where mortgages are higher, is looking at another $399 per week.

“Mortgages are just one aspect of the economic pain that is coming. Something has to break if the reserve bank continues with these hikes and the next thing will be job losses. There are already job losses occurring at an increasing rate, in the last week Today FM, Sky, Xero have all shed hundreds of employees and the Reserve Bank is predicting another 66,000 job losses across the next two years.

“The Government needs to offer the Reserve Bank a lifeline. The Governor has often said ‘monetary policy needs friends,’ referring to Grant Robertson’s budgets.

“The Government should put a moratorium on expenditures that are not urgent. Below are some Government projects that are not time sensitive (and ACT questions at any time), but are nonetheless increasing demand and driving costs.

1. The Three Waters merger is costing the Crown hundreds of billions to simply reorganise a sector. That is inflationary spending that produces no tangible outcome today, it should be paused at the very least.
2. The firearms register is slated to cost $200 million; it will make nobody safer. At best, some criminal will steal a gun and grind the serial number off it so nobody can prove they stole it off the person who registered it. At worst the register will leak and become a steal to order list for a gang. It should be paused to save money.
3. The Auckland Light Rail project was supposed to be underway by 2021. It is still not clear what the purpose of the project is or why it is being done.
4. Kainga Ora just asked for $2.75 billion so they can compete with the private sector to build homes. There is no logic to this in a resource-constrained market. It is only driving inflation. Kainga Ora should stop any new home building or purchasing, it is simply driving inflation.

“That is beside operating expenditure, where ACT’s fully costed alternative budget, which would reduce overall expenditure by 7.2 billion. Such a reduction would take pressure off the economy, so the Government does not have to kill it with high interest rates.”

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