National’s early moves adding to cost of living pressure

The Kākā by Bernard Hickey

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National’s early moves adding to cost of living pressure

Elected on a promise to reduce living costs, the new Government’s moves to stall infrastructure and housing investment, loosen migration settings and cut taxes are actually fueling higher inflation

Bernard Hickey

Nov 29, 2023

∙ Paid

The cost of living grind continues, and the economic and inflation honeymoon is over before it began. Photo: Lynn Grieveson / The Kākā

TL;DR: PM Christopher Luxon unveiled his 100 day plan yesterday with an avowed focus of reducing cost-of-living pressures, but his Government’s initial moves and promises are actually elevating inflation pressure, as the Reserve Bank’s Monetary Policy Statement and forecasts yesterday also showed.

The Reserve Bank surprised markets and economists yesterday with a warning it could raise interest rates again early next year because of higher housing costs from record-high migration and a lack of new homes, and the stimulatory effects of tax cuts.

The National-ACT-NZ First Coalition has promised to further loosen migration settings, freeze infrastructure and housing investment plans while it repeals Three Waters and the RMA, and accelerates its tax cuts for landlords. All of these moves would amplify the inflationary effects of higher rents, rates and services costs rippling through the economy, as the RBNZ laid out in its forecasts.

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