Peters names immigration as key driver of inflation
NZ Government Story
5:00AM Friday May 11, 2007
By Paula Oliver
The New Zealand Herald
Winston Peters says urgent action is needed to get New Zealand's savings rate up.
New Zealand First leader Winston Peters has pointed the finger of blame at immigration as he calls for big changes to the management of inflation in the economy.
In a stark return to one of New Zealand First's traditional policy planks, Mr Peters yesterday questioned the role that immigrants are playing in interest rate rises.
He called for a substantial rewrite of the Reserve Bank Act, requiring the bank to take into account the interests of exporters and the manufacturing sector when interest rate decisions are made.
Mr Peters said Reserve Bank Governor Alan Bollard was hamstrung by an act “that is paranoiac about one thing, inflation, to the detriment of other factors which make a sound economy”.
“There are other ways of addressing the issue of inflation,” he said.
“I mean, is it necessary to bring in 48,000, 50,000 immigrants a year, regardless of their quality, regardless of whether they're aligned to jobs?” he asked reporters shortly after delivering a speech in Wellington.
Immigration was an “important factor” in the debate and people should “not avoid the obvious”, Mr Peters said.
Immigration is watched closely by the Reserve Bank, partly because of the effect that migrants can have on the housing market and on the labour market.
Dr Bollard mentioned ongoing net immigration as one of the factors fuelling demand when he raised the official cash rate to 7.75 per cent last month.
Mr Peters told the Wellington branch of the Institute of Financial Planners' Legal and Financial Forum that urgent action was needed to get New Zealand's saving rate up and to get the monetary policy regime changed.
Labelling the country as “enslaved by debt to foreign investors”, he said the way that profits disappeared overseas meant New Zealand was working to ensure that Australians, Canadians and Japanese could have a secure retirement.
“In the absence of any large-scale savings regime or any meaningful controls over foreign investment, foreign interests have embarked on a systematic takeover of our economy,” Mr Peters said.
The pointed speech came just hours before Economic Development Minister Trevor Mallard was scheduled to give a speech titled “Foreign investment: partnership for mutual benefits” to an audience in Boston.
It also comes as Finance Minister Michael Cullen prepares to deliver his eighth Budget on Thursday, in which it is expected there will be some form of personal tax concession tied to the KiwiSaver retirement scheme.
Mr Peters would not be drawn on the hints he has previously given that something is looming, but he did say KiwiSaver was a “bright, shining beacon” on the horizon that provided the opportunity to go further.
“That's all I'm saying – you'll just have to wait until some time in the future to see what that all means,” he said.
Following on from the tax cuts that were in the Australian Budget this week, Dr Cullen was again yesterday forced to defend his not giving New Zealand's personal taxpayers a cut over the past seven years.
The Treasury yesterday unveiled accounts showing that the Government had racked up an operating surplus of $6.012 billion in the nine months to the end of March.
As hinted at by Dr Cullen last week, the Government also had a cash surplus of $2.024 billion, well ahead of the forecast $342 million.
The extra money came from delays in departmental spending and some one-off tax receipts that were not forecast, the Treasury said.
Dr Cullen faced questions in Parliament about the size of the surpluses he has run, which he said cumulatively added up to $35.5 billion when measured as the operating balance excluding revaluations and accounting changes.