Lower interest rates, a more competitive dollar and better jobs from Reserve Bank changes

Labour’s Reserve Bank Upgrade will lead to lower interest rates, a more competitive dollar and better jobs with higher wages, says Labour’s Finance spokesperson David Parker.

“The next Labour Government will upgrade the Reserve Bank Act by broadening its objective and giving it a new tool that will enable it to tackle our high overvalued dollar, help create jobs and keep interest rates low.

“Governments around the world have changed how they operate monetary policy since the global financial crisis. New Zealanders have a dollar overvalued by up to 15 per cent, a weakened export sector and mortgage rates that are among the highest in the developed world.

“Labour will make the following changes to the Reserve Bank Act as part of our Economic Upgrade:

1) Broaden the Reserve Bank’s objective beyond inflation and price stability to also assist to achieve a positive national external balance, which will boost economic growth and create more jobs.

2) Encourage the Bank to use its current tools differently, in a way that will help exporters and home owners.

3) Introduce a new tool – a variable savings rate or VSR – allowing the Bank to vary KiwiSaver savings rates (which would be universal under Labour) as an alternative to raising the OCR to take the heat out of the economy. This VSR would mean Kiwis would pay money to their retirement savings instead of higher mortgage payments to overseas banks.

“The independence of the Reserve Bank, and its ability to meet its inflation control target, are maintained.

“Labour’s changes will work with our Economic Upgrade focussing on investment, innovation and industry policies.

Alongside a capital gains tax, our KiwiBuild housing policy, universal KiwiSaver and reduced costs to businesses through NZ Power, Labour is offering an alternative that will help Kiwi families and ensure our economy can create better jobs and higher wages,” says David Parker.

29 April 2014 MEDIA STATEMENT


One pot of gold gone, Labour will create a new one

The Financial Service Council’s savings report shows while we have lost one pot of gold, Labour’s savings policy will help create a new one, says Labour’s Finance spokesperson David Parker.

The Infometrics analysis on Labour’s 1974 New Zealand Superannuation Fund shows it would be worth $278 billion had it not been axed by National.

“Higher savings mean better paid jobs. Those missing billions would have meant higher wages for Kiwis and less reliance on foreign debt and foreign ownership as a country.

“It is clear evidence that New Zealand needs KiwiSaver to be made universal, which the next Labour Government will bring in.
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Super Fund contributions must restart on surplus

National must restart contributions to the Super Fund when it gets the books back into surplus as the government books would be $2.2 billion better off if contributions had not been stopped, says Labour’s Finance spokesperson David Parker.

“New figures show that the Super Fund – one of the great successes of the last Labour Government – continues to go from strength to strength.

“But it could have been much better. The Guardians of the New Zealand Super Fund say that as of 30 June 2013 the NZ Super Fund was $10.8 billion smaller than it would have been if contributions had continued, with $2.2 billion of foregone investment gains.

“The fund returned $4.51 billion in the past twelve months at a rate of over 21 per cent. That is half a billion more than the National Government raised from its failed asset sales programme.
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KiwiSaver’s benefits a Labour legacy

Labour’s KiwiSaver is going from strength to strength six years on, despite National’s clumsy changes that risked destabilising the savings policy, says Labour’s Finance spokesperson David Parker.

“It’s been six years since KiwiSaver was set up. Over two million New Zealanders have now signed on. That’s a great success by any standards. It’s also been a great boost to first home owners, helping them build up a deposit.

“The success comes despite National’s clumsy changes that risked destabilising KiwiSaver. A retirement savings policy needs certainty to be a long-term success but in just five years National has twice changed the contributions rate and changed the tax rates. This did not benefit KiwiSaver.
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