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Select Committee Report Underlines Government Irresponsibility

Fuseworks Media
Fuseworks Media
David Cunliffe
David Cunliffe

The Finance and Expenditure Committee's own report on its examination of the Reserve Bank's June monetary policy statement simply underlines the sheer irresponsibility of the committee in not proceeding with an inquiry into bank profits, says Labour finance spokesperson David Cunliffe.

David Cunliffe says government and support party MPs on the select committee torpedoed the inquiry, but its report, released yesterday, shows just why the inquiry should have proceeded.

"In the report, the committee notes the comments by Reserve Bank Governor Alan Bollard that banks have set their interest rates higher than needed, and urges banks to reduce their short-term rates further because a low-interest-rate environment is critical to New Zealand's economic recovery

"The committee also encourages banks to recognise the national importance of lowering interest rates because unduly high interest costs could lead to closures of businesses that may be experiencing short-term liquidity problems, but otherwise be fundamentally sound," David Cunliffe said.

"The report also notes that when the committee asked the Reserve Bank to specify the major risks to the New Zealand economy in the next six months, and to explain how these could be mitigated, the Reserve Bank said it considered our economy could be at risk if our dollar remained relatively high or banks did not pass on OCR cuts."

David Cunliffe said all these conclusions added up to one thing. "The committee should have agreed to hold an inquiry into the issue. Instead the Government, after earlier appearing favourable to the idea, torpedoed it at the last moment despite the evidence produced by the Reserve Bank.

"The Government makes pious poises, but it is quite clear it doesn't care about Kiwis struggling to meet their mortgage payments or about businesses striving to make their way through the recession."

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