Spending other people's money and restricting new housing is fuelling price inflation, and encouraging Bollard to slowly kill exporters and strangle producers with higher interest and exchange rates. As Fran O'Sullivan noted last week, Bollard is putting
Mr Cleland said rising house prices would inevitably receive the blame for recent inflation increases, but property prices were not the only thing driving it. The Reserve Bank had a choice - it could either continue to "demonise" homeowners or it could put pressure on central and local government to rein in their own spending, he said.
Local authority rules limiting urban sprawl were driving up the cost of land, and therefore housing, he said. Levies, developer contributions and resource consents could also add up to $40,000 to the cost of a new home. In Wellington's central business district, public sector occupation had increased 27 per cent since December 2001, with further expansion expected to accommodate an ever-growing number of bureaucrats.
Rather than raising the official cash rate, Mr Cleland said the institute would rather the Reserve Bank "turned its attention to the public sector and begged them to stop spending other people's money."
the New Zealand economy on the flight-path for what could be one almighty crash.If Bollard had any balls he wouldn't be demonising home-owners, strangling producers and putting the country's whole economic future at risk, he'd be ripping this overspending Government a new arsehole, and riding a few fucks into the town planners who (as this recent report showed) have raised land prices around Auckland over 300% in a decade. And if this Government had any credibility at all, they'd listen to him.
The Reserve Bank's board knows full well that Bollard's strategies could push the economy to its tipping point - that perfect storm where a combination of extortionate interest rates and punishing exchange rate puts exporters out of business and results in a wave of bankruptcies and job losses.
And pigs might fly.