April 26, 2007

Cash rate “blunt tool” - EPMU

Today’s rise in the Official Cash Rate will have to be answered with higher wages or working New Zealanders will suffer, says the Engineering, Printing and Manufacturing Union.

The 0.25% rise means increasingly indebted Kiwis will be spending even more of their income servicing debts to foreign-owned banks.

EPMU national secretary Andrew Little says the government needs to find better ways to control inflation.

“Manipulation of the cash rate is a blunt tool that’s only making it harder for average New Zealanders to afford to house themselves and their families, while at the same time increasing our current account deficit.

“As always the increase in the OCR will push our dollar upwards, making it harder for manufacturers to export, and that means hundreds of thousands of decent jobs put at risk.

“We also shouldn’t lose sight of the fact that the housing market ‘correction’ that is being sought with this policy would mean some our most vulnerable citizens suffering serious financial hardship as their debts increase and their homes fall in value.

“It’s about time the government recognised that these inflationary pressures are not going to be answered by the tired old doctrine of monetarism and started to implement more targeted policies.

“In the meantime, we have no option but to push for higher wages every time the cash rate is increased. That’s the only way working New Zealanders will be able to afford to maintain their standard of living.”

The increase in the cash rate comes just days after the New Zealand Council of Trade Unions raised concerns about increases in housing costs outstripping wage increases by a ratio of 4 to 1.

ENDS

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