By Alex Tarrant
Labour leader Phil Goff has reiterated his party's desire to change New Zealand's monetary policy framework, saying in a speech today Labour would give the central bank more tools to intervene in currency markets.
Goff also flagged tax changes under Labour, saying National's policies were putting a greater share of the total tax burden on middle income earners, whereas "the squeezed middle will pay a lower share of total tax" if Labour were to win the next election.
Goff's comments come as the government's accounts show the government ran a NZ$4.4 billion deficit before investment gains and losses in the four months to October 31, NZ$1.9 billion higher than forecast in the May 2010 budget.
"We have already announced reform of the Reserve Bank and monetary policy to make interest rate and exchange rate policy more supportive of exporters," Goff said in his last major speech of the year in Auckland.
"We will keep in place the Bank’s operational independence and the current 1-3% inflation target, but widen its objectives to help exporters. We will equip it to intervene more aggressively. It will have new tools to control liquidity," Goff said.
"It is clear persistently high interest rates and a volatile New Zealand dollar are causing deep structural problems for our economy. New Zealand exporters are at a disadvantage against overseas competitors who are able to fund their activities at a lower cost. Our exporters have to plan for the value of the dollar changing at great speed and little predictability," he said.
"Other countries achieved control of inflation without interest rates staying higher than international averages over time, and so should we."
'Middle class to shoulder less of the tax burden'
Meanwhile, Goff flagged tax changes if Labour were to win the next election.
"By paying debt down more slowly, National is pushing more of the total tax load onto future generations. They’re also putting a greater share of the total tax burden on middle income earners. We won’t," Goff said.
"The squeezed middle will pay a lower share of total tax," he said.
"We will crack down on avoidance so everyone pays their fair share.
Spending limits
"Overall, our fiscal stance is more responsible," Goff said. "Therefore it comes with strict limits on new spending."
"Any major new social spending will have to create jobs, help to ease the cost of living for families or ensure that children are getting off to a great start in life," he said.
"Any other major social spending will need to be paid for by reallocating spending," Goff said.
"This is a big call, but it’s in the interest of our economy today and in the future to pay down net debt over the business cycle and to be disciplined in our spending," he said.
"What this means overall is that there will be a much more important debate about active management of the economy for higher incomes and better jobs.
"National’s approach is more passive, and more trickle down. They believe the jobs will come if you cut top tax rates. But the jobs haven’t been coming."
(Updates with tax comments)
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8 Comments
It's 'will' that is required, as much as tools. If RBNZ had the 'will' we would see that they have a useful array of tools as it is.
Why don't they have the 'will', motivation to use what tools they have already?
Les.
Here's what Bollards personal hero has said recently in a 60 mins interview:
On other issues in the 60 Minutes interview, Bernanke:
- Argued that unemployment would have been far higher - "something like it was in the Depression, 25 percent" - had the Fed not provided extraordinary aid to Wall Street firms, banks and other companies to ease a credit crisis.
- Said it could take four or five more years for unemployment, now at 9.8 percent, to fall to a historically normal 5 percent or 6 percent.
- Reiterated that the Fed is prepared to buy even more than US$600 billion in Treasury bonds over the next eight months, should it decide the economy needs the fuel of even lower interest rates.
- Argued that the risk of inflation is overblown. Bernanke said he's "100 percent" confident the Fed will be able to ward off inflation, when the time is right, by raising interest rates and unwinding its stimulative programs.
- Called the risk of deflation - a prolonged drop in prices, wages and the values of homes and stocks - "pretty low." He said the likelihood would have been greater if the Fed weren't maintaining super-low interest rates.
Talk about clueless and out of touch!
Historically no one before Bernanke could do what he claims he can do, ie stop deflation and make sure inflation does not leap out of the bag as recessions/depression ends not one this deep.....reality check the Trillions they have thrown at this in 18 odd months has stayed off the deflation/depression just, but its not removed it...if he thinks there is about zero risk of deflation then he's either afraid sayiing so will trigger it, really believes he's fixed it and is clueless.....or is the second coming of jesus incarnate...I go with the former....
regards
Goofy's economic blather has already been forgotten by the media....not a surprise since it was meaningless drivel mixed with promises for all. Nice to hear him mention his new spokesperson on economic matters...one "David Caygill"......We await a more detailed Labour Party load of BS from Caygill.........................................
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