Cunliffe lambasts English over OCR rate increase
28.07.10 The near certain 25 basis point rise in the Official Cash Rate (OCR) tomorrow risks driving up interest and exchange rates and increasing the pressure on already struggling Kiwi families, says Labour Finance spokesperson David Cunliffe.

“Rebalancing the New Zealand economy requires a sustained lift in export levels, a sustained improvement in savings, and an ongoing reduction in net international liabilities,” David Cunliffe said.

“All of these are easier to achieve if exchange rates are competitive and stable,” he said.

“BusinessWeek and other international commentators have identified government policies, such as the broken promise not to raise GST and other price rises feeding into wage and price expectations, as contributing to the Reserve Bank’s likely decision tomorrow.

“In other words, Bill English will only have himself and John Key to blame when higher interest rates hurt New Zealanders’ household budgets and hurt returns to exporters,” David Cunliffe said.

“Low and middle-income Kiwis themselves will have John Key and Bill English to blame as well when they wheel their half-empty grocery trolleys up to the supermarket checkout and are confronted by a higher bill to pay because GST and other price rises of 5.9 percent next year have outstripped the cynically meagre income tax cuts this Government has given them.”

“Having put the country into hock to pay for tax cuts favouring the wealthiest at the expense of low-income and average-income Kiwis, Mr English is scrambling around trying to find a way to balance the ledger.

“Such sales, almost inevitably to overseas buyers, will simply add to our current account deficit. The gap between what we earn and spend as a nation will more than double,” David Cunliffe said. “That gap will also help continue to push up interest rates as we borrow overseas to meet the difference.”

David Cunliffe said today’s interest rate rise is the first of some bitter seeds sown by the Budget for most New Zealanders.