National and Act jostle for credit over Finance Minister's RBNZ letter

Author
Newstalk ZB,
Publish Date
Tue, 24 Nov 2020, 8:01PM
(Photo / NZ Herald)
(Photo / NZ Herald)

National and Act jostle for credit over Finance Minister's RBNZ letter

Author
Newstalk ZB,
Publish Date
Tue, 24 Nov 2020, 8:01PM

Both major opposition parties are jostling for credit over who prompted Finance Minister Grant Robertson to lobby the Reserve Bank to more closely address soaring house prices first.

National and Act have welcomed the Government's moves to curb house prices; this afternoon, Robertson wrote to the Reserve Bank Governor Adrian Orr asking him to consider adding house price stability to its job description.

The Reserve Bank, according to a spokesperson, is now considering the information and would be "engaging constructively and responding in due course".

Not long after Robertson's announcement, National and Act said they had this idea first – something Robertson has rejected.

After weeks of pressure, Robertson this afternoon unveiled the letter he sent Orr asking him to consider adding house price stability to its monetary policy mandate.

"I am concerned that the recent rapid escalation in house prices, and forecasts for this to continue, are affecting the Government's ability to meet the economic objectives set out in the Remit," he said in the letter.

Act leader David Seymour during his press conference over house prices, Parliament, Wellington. 24 November, 2020. NZ Herald photograph by Mark Mitchell

Act leader David Seymour. (Photo / NZ Herald)

Although National's treasury spokesman Andrew Bayly said it was an "excellent thing to do," he said it was something that for some time, he has been pushing for.

"I am very grateful that the Minister of Finance has taken our advice and written to the Reserve Bank Governor today."

Last week, Bayly called on the Government to "rein in the Reserve Bank".

He said the Robertson needed to send a letter of expectation to Orr – but that letter would be focused on "mandating" the Reserve Bank to ensure the $28 billion earmarked for its funding for lending scheme goes towards building houses and supporting small businesses.

National finance spokesman Andrew Bayly during his press conference over house prices, Parliament, Wellington. 24 November, 2020. NZ Herald photograph by Mark Mitchell

National finance spokesman Andrew Bayly. (Photo / NZ Herald)

At the time, Prime Minister Jacinda Ardern likened this call to something former Prime Minister Robert Muldoon would do – in his time Muldoon had meddled with the Reserve Bank's affairs.

This morning, Robertson said what he had done, and what National had proposed, was different.

The Government wants house price instability to be considered by the Reserve Bank when it is setting its policies – how Orr tackles the issue is up to him, Robertson said.

But National was proposing a direct intervention in the Reserve Bank's job.

Act leader David Seymour also this afternoon claimed credit for the idea of the letter.

Speaking to Interest.co.nz the day before the October 17 election, Seymour pitched the case for "asset prices being part of the set of targets the Reserve Bank has".

He told media today that Act has been saying "longest and strongest that we need to start looking at asset price inflation (house prices) when we look at other inflation".

"It is simply unsustainable that the Reserve Bank looks at the price of pizzas, petrol and cigarettes but not the most important asset that most New Zealanders will buy."

Meanwhile, the Greens said the letter was a good start but the Government needs to pull the tax leaver if it wants to make meaningful changes to the red-hot housing market.