According to their web site (btw, I notice that Labour’s Red Alert blog hasn’t been updated for about six weeks, indication that Matt McCarten has made a positive contribution) Labour will:
- Maintain the Reserve Bank’s independence and its inflation target.
- Broaden the objective of the Reserve Bank to include the external balance and allow it to use current tools to tackle our overvalued dollar.
- Give the Bank a new tool to adjust universal KiwiSaver savings rates as an alternative to raising interest rates. This would mean Kiwis would pay money to their retirement savings instead of higher mortgage payments to overseas banks.
Universal KiwiSaver and a tool to adjust KiwiSaver rates to keep mortgage rates low? I think you can do one of these but not both. If you’re going to compel people to save their money because its good for the economy then that’s one thing. But if you’re going to compel people to save money and then modify the rates to benefit a smaller subset of people who have mortgages you’re in the tricky position of higher rates having a disproportionate impact on lower income earners – who are unlikely to own a home – and benefiting higher income people with mortgages. That’s hard to justify.