Bill English doesn't want Winston Peters anywhere near NZ's monetary policy settings but can't rule him out becoming Finance Minister - says that's up to voters to decide

By Alex Tarrant

Prime Minister Bill English says he doesn’t want New Zealand First leader Winston Peters anywhere near monetary policy post-election, but can’t and won’t rule him out becoming Finance Minister.

Speaking to a live Herald interview Tuesday, English was asked if he could calm 'the market' by ruling out any influence on New Zealand’s monetary policy settings from Peters if National formed a government with New Zealand First after 23 September.

While he responded initially that “we certainly wouldn’t want Mr Peters around monetary policy,” when pushed English said he could not completely rule out Peters ending up as Finance Minister as voters might “put us in that position”.

The line “voters will decide that” is increasingly being used by National when it comes to questions on dealing with Peters after the election. Technically it’s up to the National Party on who it turns to regarding coalition deals and Cabinet positions for MPs from other parties. But it’s a good line that no doubt English (and probably Jacinda Ardern) will keep repeating as they try to win back voters from the fringes.

Peters wants New Zealand to shift from its current monetary policy model of using the Official Cash Rate (OCR) to influence short term interest rates to a Singaporean model, where currency intervention is used as the tool to target price inflation; the Monetary Authority of Singapore (MAS) does not set a base interest rate like the OCR. Former RBNZ economist Michael Reddell has critiqued Peters’ monetary policy designs in depth over at Croaking Cassandra.

New Zealand dollar and bond traders are closely watching the election outcome for what signals it might send on interest rate and currency settings here after 23 September.

Labour has announced it would give the Reserve Bank a dual mandate of price inflation and maximum employment. Its finance spokesman Grant Robertson initially said Labour would not tell the Bank which mandate to favour at any one time and that he would not set a numerical maximum employment target.

However, in his Labour Party Congress speech in May, Robertson promised that a Labour-led government would ensure a headline unemployment rate of 4% by the end of its first term in 2020 – a setting that could well be inflationary, particularly if the OCR had been set lower-than-usual to influence a fall in unemployment/rise in employment. He has also said Labour would continue with the Policy Targets Agreement for the RBNZ to target CPI inflation of 1-3% on average over the medium term.


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38 Comments

So voting National means that our monetary policy could be improved rather than left to perpetuate National's disaster. I hope that those voting for National understand they will be the NZF finance policy (this could be inevitable no matter who anyone votes for now).

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National would be well advised to STFU about their economic performance.
"We’ve had a net non-citizen migration inflow of almost exactly 300000 people in just the last five years. With no productivity growth at all in that time, and an export (and import) sector shrinking as a share of GDP, and business investment pretty subdued too, one might reasonably ask ‘to what end?’ for New Zealanders.

We should be left wondering why, if we vote for them, either main party expects anything different than the mediocre economic performance of the last few years. Gareth Morgan criticised Labour’s apparent lack of much policy substance as “putting lipstick on a pig”. It isn’t obvious that the National Party is even offering the lipstick."
https://croakingcassandra.com/2017/08/22/economic-performance/

So Dictator, that doesn't apply for Labour voters as well? I must have missed Jacinda's announcement that she wouldn't work with NZF, or perhaps her refusal to consider him as Treasurer if she was ? I have no doubt in which coalition Peters goes where the tail will more likely wag the dog, and Winston knows it too - so ironic that you warn National Party supporters

@Grant A yes it does apply to Labour as well. If the number of seats line up so NZF is the Kingmaker party then Winston will go with the best deal. National have a history of offering that best deal so far.

Coalition partners still only get to wag the dog proportionate to the number of seats, and Winston knows how to not push the deal too far. No point going into a rotten deal and being blamed for the Government falling apart weeks later.

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I don't care who's in power, as long as part of any coalition deal is that someone reigns in these ridiculous immigration numbers!

Yes User, its going to be very interesting to see how the economy responds to that bearing mind what I see in my travels where many of my customers will be severely handicapped in their the ability to do business because of their inability to fill roles when there are no suitable local candidates. My pick, they'll cut immigration, suffer the consequences, and then back off (indeed as National did recently did but on a far greater embarrassing scale).

If they don't back off, then watch which way business confidence goes, watch what happens to the economy, and ultimately watch what happens to employment (which is what you're no doubt complaining about ), it won't be pretty..

Jacinda Ardern was noting that it's important that migration be targeted to the regions, rather than the cities, precisely to target skills gaps (where they actually exist, not just a gap between wage/working condition expectations) rather than simply filling up Auckland hand-and-fist as fast as possible, as is the current model.

So you'd expect to see rules adjusted to reduce numbers coming into Auckland and keep the volume currently hitting the regions.

I believe there's a few surplus real estate agents looking for work already.

If the economy wasn't being pumped by massive population growth there would probably be more people available for work. It's a fallacy that migration relieves labour shortages - generally migrants (especially if they're allowed to bring families) add more to the demand side of labour than the supply side.

I agree Grant and very well put,
it is unfortunate that some people let their sentiment talk while their minds are still on holiday ... the immigration issue is a just a ticket to play on voter sentiment until they get in power where they will face the hard facts that this country's income is very much attached to reasonable numbers of immigrants and tourists as long as we cannot have a workforce of our own ( low or high wage) ....

4% unemployment by Grant R is a blatant lie and this man does not know what he is talking about ... 4% never happened, and will never happen unless he wants to count every disabled person, sickness beneficiary, DPBs, and immigrant as a potential employable workers ( including mums and dads and relatives over 60 years old) ...

Every party getting in power will then face the realities dished out to them by the bureaucrats and will all go OOOps , let's spin and tweak these policies out ....then the emperor will be officially declared NAKED !!

Unemployment was under 4% from 2005 to the end of the last labour government in 2008. From the link I posted above: "And all this is without even repeating for the umpteenth time that the unemployment rate now is still higher than it was at any time in the last five years of the previous Labour government, at a time when demographics appear to be lowering the natural rate of unemployment. Or the underutilisation rate of almost 12 per cent. We should be able to do a great deal better for New Zealanders."
https://tradingeconomics.com/new-zealand/unemployment-rate

David - you do realise that the last Labour Govt presided during a period of global boom that ultimately lead to an equally global collapse that saw them dumped from Govt - a similar period to the early 80's when the same thing happened. I don't see that as a badge of honour or any comparison to the period that National inherit from labour

I was correcting Eco Birds erroneous claim that "4% unemployment never happened" and linked to the statistics but agree regarding that boom period and it's inevitable collapse.

Haha , thanks David , very precise and concise indeed !!... jesus man!! , get a bit serious rather than pick tit for tats arguments ... 2005 -2007 was the boom of the world, might never be seen again and NO thanks or credit to Labour for doing anything other than wide opening the flood gates then ....their frugal economy was deplorable back then if you remember.!! they were lucky that they were kicked out at the right time or they would now be on the wrong side of history !!

I wouldn't pay much attention to employers saying they can't get staff, Grant - they always say that!
We've the (near?) highest participation rate and hours worked in the OECD. We import almost all our manufactured goods and export most of our commodities as raw materials so our people certainly aren't busy in the factories. Just what are our people doing that we "need" to have the highest immigration rate in the world? Why are we earning 30% less than the Aussies in our common labour market when we have among the highest skilled and hardest working workforce in the OECD? There's something very wrong and if more immigration is the answer we're probably asking the wrong questions.
https://croakingcassandra.com/2016/06/30/skills-matter-and-we-already-se...

I'm not a casual observer of these companies David, I know their numbers and their pressures - I can't answer your question, but I certainly don't think its immigration that causing it.

Sorry David, your observations and questions are quite shallow and we dont need to dig deep into them too much or waste too much time - BTW there are no clear answers to your questions ...!!

Huge difference between NZ and OZ, not that simple to explain or conclude as you asked!!

Your conclusions about us being not too busy because we just import and export does not hold any water either ...

We have as much usable workforce in employment as we can, the REST is either lazy, sick, cannot be bothered, too old, didn't pass the drug tests, or engaged in some sort of festive activities on the crown's and tax payer's expense...

Businesses requiring labour and workers is a very serious matter and it does affect the economy, it is more about availability and survivial than economy of scale and profits.

These are very vast issues to be discussed AFTER the election ... I say let's focus on who is the least EVIL and vote accordingly.

It's difficult to know where to start Eco Bird to answer your confusing response but I would urge you to read the Croaking Cassandra links I posted.
I think there is problem with social dysfunction; our exceptionally high immigration intake is exacerbating that problem and giving an entirely false impression of economic health.

Have you tried running it through the Google auto-translate for Crazed Gibberish to English?

You have to poach good people from the businesses below you by offering them a significantly better job. That's how the system works. Allowing excessive immigration stuffs this natural process up.

For example, it is more than pathetic that we cannot train enough builders and have to import them.

Perhaps the most dangerous immigrant is the civil servant from a bigger country. They will advocate more of the rules and regulations that messed up their own country and caused them to want to move here.

Agreed ...on the sentimental side , But in your opinion, what is stopping US from training builders?? honestly ...?/

We know that you can take a horse to the water, but can you really force him to drink??

It is funny that you have mentioned that, I came across someone who needed to renew his deck, a qualified builder ( friend) was called to do that job as he does most of my friend's jobs, he quoted an exuberant price that choked my friend !!... when asked why, he said , I am a qualified builder and charge $60/hour as you know for years, I will be needing some help on this job and the unqualified jokers are asking $75/ hour +GST to do it !!! ....
so if the industry is that lucrative ..Why can't we train Builders?? and whose fault is it?? the people, the money, the industry? or just simply the Government???

I see ( foreign) boys working as electricians, plumbers, tilers, hammer hands, and running like farmer's dogs all day long for less than $25 - $30/ hour and they are so efficient and quick in jumping from one job to the other .... !! You may love them or Hate them ... but they get the job done !!! and get paid big and save and buy houses in few years ... Most are employed full time by contractors or companies BUT they also work after hours, and they work their weekend when everyone else is R&Ring .. its a choice!!...

The problem you mentioned is not the government or immigration - the problem is in our ATTITUDE, COMPLACENCY, and EXPECTATIONS .... the 80,000 capable working people on the DOL are welcome to be trained and upskilled ... What is Stopping them??!!

As you mentioned the immigration "stopped this Natural process up", so the expectation is for businesses to keep paying higher and higher wages in a time when margins are getting slimmer and competition is tougher and technology is replacing people ??

Well guess what?, that is what happens to people stuck in the past Roger and expecting wonders when a cheaper alternative is abundant !!

Why not blame the IRD for sending thousands home shortly after software system upgrade, or NZ post, or Spark? or any other business trimming their expenses to show a profit to shareholders ??

Most immigrants are happy with the entry level jobs in Hospitals, councils, and public service - they have experience and are grateful to be employed - so are their spouses and sons... who all work ... because being on benefit is a Shame in their culture !!!

Please hunt a white face in any Hospital or care giving facility !! and tell us how many did you find.

"I see ( foreign) boys working as electricians, plumbers, tilers, hammer hands, and running like farmer's dogs all day long for less than $25 - $30/ hour and they are so efficient and quick in jumping from one job to the other .... !! You may love them or Hate them ... but they get the job done !!! "

Have you had a close look at some of the workmanship ? Ill just leave it there.

The construction industry is generally charging like wounded bulls at the moment because it is so busy. Because we have allowed the apprenticeship scheme to flounder for years and we import cooks and milking shed workers.
If we have to have massive immigration, lets cull all the chaff and only allow in a skilled work force that we actually need, how hard is that ? More takeaway cooks will only add to the diabetes problem.
And is a 7 day working week what it is all about ?

Lets not forget our history - Labour Day commemorates the struggle for an eight-hour working day. New Zealand workers were among the first in the world to claim this right when, in 1840, the carpenter Samuel Parnell won an eight-hour day in Wellington.

It might be better, for all concerned citizens, if monetary policy discussions turned to the glaring inability of the RBNZ to achieve the mandated goals it currently sets for the nation on our behalf.

Moreover, RBNZ public reference to the nation's saving level and the consequent intermediation of it by banks to qualified lenders must cease. We no longer have a banking system based upon the principles of a state savings edifice - it currently emits discretionary ledger credit to create deposits - hence there is no money in central bank monetary policy and by default no rising inflation - no matter how many claim the term "stimulus" is interchangeable with current OCR actions.

To be honest, I think that voting for any Minor party is a Waste of time and effort ...let's face it ,,, the two major parties will have the most votes (and trust) of most NZers to lead a Government according to their announced policies ...

Mixing A Salads with strange or rotten vegetables from here or there just ruins the whole recipe of any "Main Party Policy Mix" .... the more foreign and rotten veggies you add the bigger the Mess, and it all ends up to be a disgusting dish we all have to eat for the next 3 years !!

I say, however you are aligned, Vote for either Labour or National as you please and lets get on with it ...leave the others floundering in their BS and eating their own dust ...( BTW, that includes the useless Greens too)...the minor parties had their day under the sun and have been heard and understood !! .. Cool, but let us stop that where it is and NOT ruin the salad !! We want a stable and powerful Government ( which ever it was left or right ) to get to work without arm twisting and blackmails ... and we shall revisit this in 3 years and evaluate ...

Voting will be much simpler if we weigh the total ins and outs of Labour vs National and decide which is the lesser EVIL and which suits our understanding of issues around us... simple I guess ! lol ..

100% agree Eco Bird - I've always preferred FPTP on the basis of electing someone, letting them get on with the job whoever they are, and if they perform poorly, you have the opportunity to throw them out within 3yrs - NZ's two centralist parties are never going to run off the rails that quickly that they can do irreparable damage in the time.

Garbage, all the FPP delivered was gerrymandering of electoral boundaries and no contests in seats that were held by whoever they held them with large majorities. At least with MMP we can have ding dong clashes such as Auckland Central and whatever is the name of the seat Paula Bennett holds. Everyone gets a decent shot at things. Had Judith Collins and National heeded what the NZ public wanted in the way of changes to MMP at the time of the review, the system could have been improved. But all I can say, is never, ever, ever should we revisit FPP.

To be honest, I think that voting for any Minor party is a Waste of time and effort ...let's face it ,,, the two major parties will have the most votes (and trust) of most NZers to lead a Government according to their announced policies ...

Hmmmm.....

British democracy needs a dramatic overhaul following this year’s “hold your nose” general election that saw 6.5 million people voting tactically rather than for what they truly believe in, the Electoral Reform Society (ERS) has said.

Its new research - The 2017 General Election Report - offers a damning analysis on the first-past-the-post electoral system (FPTP) under which the party that gains the most MPs, rather than the most votes overall, wins.

Around 22 million votes cast in the election had no impact on the overall result, due to the winner-takes-all nature of the “broken” FPTP system. Read more

Why do we keep comparing NZ to other countries and other people and other sets and subsets of problems , lifestyle, thieves, and charlingtons ....?? who cares about British, or USA, or Canada's democracies .... why should we copy ?? or follow ??

I guess that is a fair question !... and I still say that there are so many special attributes to NZ which could be very different to others and their Way of life, Needs, and Priorities ...

Be it FPTP, or MMP ... Text book definitions never applied in full everywhere as you might experienced !

So, I still say :

VOTE NATIONAL OR LABOUR as you please - SCRAP THE MINOR PARTIES - DON'T LOSE YOUR VOTE ... LET's DO IT Properly!!

I am getting concerned for your blood pressure-take a deep breath and calm down.

I spent most of my voting life in a constituency where one party could have stood a monkey on a stick and it would still have won. My vote never counted. MMP is certainly not perfect and could be improved,but I don't want to return to FPP.
Also,contrary to your advice and the major stuff-up they have just made,I will still be voting Green. I want them to have a presence to speak up for environmental issues.

I am getting concerned for your blood pressure-take a deep breath and calm down.

I spent most of my voting life in a constituency where one party could have stood a monkey on a stick and it would still have won. My vote never counted. MMP is certainly not perfect and could be improved,but I don't want to return to FPP.
Also,contrary to your advice and the major stuff-up they have just made,I will still be voting Green. I want them to have a presence to speak up for environmental issues.

I am getting concerned for your blood pressure-take a deep breath and calm down.

I spent most of my voting life in a constituency where one party could have stood a monkey on a stick and it would still have won. My vote never counted. MMP is certainly not perfect and could be improved,but I don't want to return to FPP.
Also,contrary to your advice and the major stuff-up they have just made,I will still be voting Green. I want them to have a presence to speak up for environmental issues.

Eco I admire your spirit but the reality is that MMP put paid to that simplicity long ago, as well as introducing another 30 or so of sub standard twerps to sit in parliament at our expense. The electorate has been thus seduced into believing that a minor party, or a posse of them, can provide some discipline or stop undesirables running away with the spoon. Probably the power crazy controller that Muldoon was perceived to be in his few last years as PM, gave people reason to worry about that, and laid the seeds. The USA
sometimes creates something of the same sort of scenario, balance if you like, by having the President set against either one or both of the houses, under the control of the opposition. My, what a spectacular backfire that is at the moment!

The only hope for this system might be a reduction back to 90 or so seats, as the Royal Commission of the time, stated then there was absolutely no reason to increase numbers of MP's for the sake of MMP. That might at least cull some of the perennial no hopers, improve the calibre and efficiencies?? So it is with some irony that WP leader of a minority party is the one voice for that. That sort of outcome would explain, I think to quite a degree, how MMP was hoped to be beneficial.

Spectacular could soon prove to be an understatement - A circus, is a more likely definition !!

Appreciate your comments ... I know the pros and cons of FPTP and MMP .. they can both be abused and both can be very useful, however MMP becomes dangerous when one or more minor parties gathers enough votes to hold the balance of power and
hold everyone else ( the majority of people) to ransom !!
So we go to endless periods of trial and error while having to bare the sub standard twerps sitting there and paid north of $140,000 + expenses a year !!

Maybe we are going through a time when we only need one capable party to lead the government - Good or bad , but surely wont tolerate a Circus !!

Im not sure what that actually means but it sounds like a Dictatorship.

Whatever it is Im voting Winston. Reduce immigration.

So am I. For the first time. Safety brake! Otherwise Labour will tax NZ to a standstill.

That's not quite logical Eco.

In any case, at the end of the day a minor party can't hold everyone else to ransom. Labour and National can always vote together to defeat them. And they have done in the past. In other countries with proportional representation it is not unheard of the mainstream parties to come together in a "grand coalition" to get the centrist policies through, when neither of them have suitable coalition partners who aren't crazy.

thanks, yes they can vote together on Major strategic issues and most of that would be related to International trade or foreign affairs or similar ... not in internal affairs like budgets, Taxes, housing or even immigration , my point is the bigger the number of vote gained by a minor party the higher would be their leverage in negotiations and more complicated policy settings -- however, Every Election is Different ...different issues, time, priorities, economy, and international atmosphere.

A single party with steady firm hands to Govern is much more efficient than a 70/30 or 60/40 coalition ( especially when they are not quite ideologically aligned and have differences on major policies) ... It becomes Horse Trading and a Mess on every single decision ... and will be more complicated than an agreement of Confidance and Supply with a minor party holding only 1-3 seats in Parliament ...

there is no dictatorship, the opposition is always there to keep everyone in check and NZers will be watching them very closely and boot them out if they fail to perform ...

That is my view and preference anyway ...

Yes agreed but unfortunately over the last nine years their ain't been much effective opposition in parliament and in it's own way that looks like becoming part of National's undoing. Been allowed to get away with too much, become sloppy, unaccountable and uncaring, which the electorate has understandably turned against. Think if there had been a Holyoake, Kirk, Muldoon, Lange personality in opposition this National Government would either been gone after two terms or would have had to have lifted it's performance considerably.

Winston will be a kingmaker after the election because he is the only politician realistic about the damage being done to NZ economy and society by high immigration.
Most NZers can now see this despite the media still portraying current immigration policy as being a success story.
390,000 population growth in 5 yrs is a disaster. Put them all in one place and you have NZ's 3rd biggest city.
Whoever is the next government has to pay for the infrastructure for all these people. Higher taxes, capital gains tax, road tolls are inevitable.
Winston is the only politician willing to stop this madness. It has reduced much of NZ to inescapable poverty while others have got rich selling their country.