ZB

Prime Minister Jacinda Ardern says a reduction in spending having an impact on inflation is questionable

Author
NZ Herald ,
Publish Date
Sun, 31 Jul 2022, 10:26am
Prime Minister Jacinda Ardern. Photo / Mark Mitchell
Prime Minister Jacinda Ardern. Photo / Mark Mitchell

Prime Minister Jacinda Ardern says a reduction in spending having an impact on inflation is questionable

Author
NZ Herald ,
Publish Date
Sun, 31 Jul 2022, 10:26am

Prime Minister Jacinda Ardern has said she'd be prepared to take an "honest" look into the drivers of inflation in New Zealand but reiterated that the country is in company with the rest of the world.

On TVNZ's Q+A this morning, Ardern said the cause or factor of inflation is from global impacts rather than the government's spending, despite the fact the Governments core spending has been increased by 11 per cent, excluding the Covid relief package, each year since 2018.

"It's over simplistic that that is a factor and I'll let the Reserve Bank speak for themselves if they consider it too," she said.

"I'm happy to take an honest reflection on what's got us to this point but when I look at the fact that we are in such company, whether you are looking at Asian economies, economies within Europe or the US, Canada or Australia – we are all having this experience."

She said the government has a willingness to do what is needed to take the pressure off Kiwis and would continue to do so if inflation continued to rise.

Pressed on whether or not the $350 cost of living payment, the first installment set to be deposited into the bank account of two million on Monday, would only add to inflation, Ardern said it is expected to have minimal impact.

"The advice that we got from Treasury is that because it was time limited and targeted would lessen the potential impact on inflation," she said.

On targeting the winter energy payment, she said she stands by the fact that 80 per cent of New Zealanders, some of which would not require it – such as millionaires, receive this injection of funds.

"So yes, global inflation, we have a tough period but we also predict that it will come away and we are well place to recover because there are so many other elements of our economy that are strong."

"The responsibility we have is to help New Zealanders get through it and that's where you'll see that we've been so squarely focused on where we can take that pressure off.

"You'll see that we've tried to be agile to the circumstances we see and we'll continue to see what impacts these are having on New Zealanders and do what we can, we have a way to go with getting the food costs down which is another big project for us."

Ardern rejected the opposition party's idea that some spending, such as on the restructuring of the healthcare system and a TVNZ merger, has had a play on inflation.

"The opposition coming at us and saying that their response would be to see a reduction, that is a reduction in education, health care, law and order – very much where those significant investments have been about maintaining and growing services New Zealand relies on."

She questioned where a reduction response would have any impact on the current inflation situation.

Prime Minister Jacinda Ardern has said she'd be prepared to take an "honest" look into the drivers of inflation in New Zealand but reiterated that the country is in company with the rest of the world.

On TVNZ's Q+A this morning, Ardern said the cause or factor of inflation is from global impacts rather than the government's spending, despite the fact the Governments core spending has been increased by 11 per cent, excluding the Covid relief package, each year since 2018.

"It's over simplistic that that is a factor and I'll let the Reserve Bank speak for themselves if they consider it too," she said.

"I'm happy to take an honest reflection on what's got us to this point but when I look at the fact that we are in such company, whether you are looking at Asian economies, economies within Europe or the US, Canada or Australia – we are all having this experience."

She said the government has a willingness to do what is needed to take the pressure off Kiwis and would continue to do so if inflation continued to rise.

Pressed on whether or not the $350 cost of living payment, the first installment set to be deposited into the bank account of two million on Monday, would only add to inflation, Ardern said it is expected to have minimal impact.

"The advice that we got from Treasury is that because it was time limited and targeted would lessen the potential impact on inflation," she said.

On targeting the winter energy payment, she said she stands by the fact that 80 per cent of New Zealanders, some of which would not require it – such as millionaires, receive this injection of funds.

"So yes, global inflation, we have a tough period but we also predict that it will come away and we are well place to recover because there are so many other elements of our economy that are strong."

"The responsibility we have is to help New Zealanders get through it and that's where you'll see that we've been so squarely focused on where we can take that pressure off.

"You'll see that we've tried to be agile to the circumstances we see and we'll continue to see what impacts these are having on New Zealanders and do what we can, we have a way to go with getting the food costs down which is another big project for us."

Ardern rejected the opposition party's idea that some spending, such as on the restructuring of the healthcare system and a TVNZ merger, has had a play on inflation.

"The opposition coming at us and saying that their response would be to see a reduction, that is a reduction in education, health care, law and order – very much where those significant investments have been about maintaining and growing services New Zealand relies on."

She questioned where a reduction response would have any impact on the current inflation situation.