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In his first article in an election year issues-based analytical series on economic policies, Brian Fallow looks at Labour's plans for monetary policy

In his first article in an election year issues-based analytical series on economic policies, Brian Fallow looks at Labour's plans for monetary policy

By Brian Fallow*

The changes Labour proposes to make to the monetary policy framework sit somewhere between cosmetic and perilous, but closer to the former. 

It plans to amend the Reserve Bank Act to introduce an employment objective for monetary policy to sit alongside the current objective of “stability in the general level of prices”. The exact language has yet to be decided.  

There would need to be consequential changes to the policy targets agreement with whoever succeeds acting governor Grant Spencer in a year’s time. “How we then give effect to the law is the bit that would be negotiated”, Labour’s finance spokesman Grant Robertson told me. 

In addition Labour is “leaning towards” abandoning the single decisions maker model where the sole statutory responsibility for monetary policy decisions rests with the governor and towards more transparency around how those decisions have been arrived at. 

Before considering how much difference such changes would make in practice – spoiler alert: not much – it is worth noting where Robertson is coming from on this. 

He sees the Reserve Bank Act, now nearly 30 years old, as the product of its times, most notably an extended period of virulent inflation which was especially hard on those on lower incomes. “Controlling inflation was, and is, a very important element of what monetary policy should be about. Nobody wants to see inflation getting out of control.” 

Jobs now the focus

But that was then and this is now. Looking forward the central economic challenge as Robertson sees it is jobs. “A focus on getting people into work, decent and sustainable work, cannot just be a feature of fiscal policy. It has to be a feature of monetary policy”. 

If it is a given that monetary policy needs mates, and fiscal policy is one of them, then that friendship should be reciprocal. Neither should lean against what the other is trying to do. “The economic project I want to be leading is in large part about the creation of decent work. I think we need to apply all the levers, while understanding that price stability is very important.” 

This way of framing the issue assumes – in violation of the economic orthodoxy, it must be said – that monetary policy can make a sustained difference to real economy things like employment. 

Clearly the bank’s interest rate calls can affect the timing of business decisions to hire or shed labour. But that does not mean it can deliver a sustained increase in employment. 

Robertson evidently does not accept that. Asked how much difference the regime he advocates would have made, had it been in place in the past, he said, “In the very immediate past, not that much, truthfully. But there have been other times in our history, and there have been other examples around the world, when lower interest rates could have helped to reduce unemployment.”  

Even now, “Are we satisfied as a country that with 3.5% growth 5.2% unemployment is okay?”

No reliable seesaw relationship

Unfortunately there isn’t a nice rigid reliable seesaw relationship between unemployment and inflation. Policymakers can’t just decide which end of the seesaw to plonk the heavier kid on. 

Even so, normally you would expect the inflation and employment objectives to align and point to the same policy response.  

Central to the way inflation-targeting central banks approach their task is to estimate the output gap. That is the gap between actual and potential or sustainable output, the latter reflecting fundamental factors like labour force and productivity growth rates. 

If unemployment is on the high side it is an indicator of slack or spare capacity in the economy and a signal for policy to ease. It is not the only factor, but research the Reserve Bank has done concludes the state of the labour market has proven a more robust indicator of the output gap than others, like what business surveys are saying about capacity utilisation and investment intentions. 

So it is doubtful that adding an explicit employment objective to the statute would make more than a marginal difference to the Reserve Bank’s monetary policy decisions, though it might make a difference to the prominence give to discussion of the labour market when those decisions are written up. 

Normally, that is. It is, however, possible for the two objectives to diverge, especially if we were looking down the barrel at a stagflation scenario, when the real economy was heading south but prices were heading north. 

What to do then? 

Even under the status quo it would depend on why prices were rising in those circumstances. If it was the result of a transitory shock, like a spike in oil prices, then the existing PTA effectively tells the bank to look through it, unless it looked like spilling over into generalised and persistent inflation that threatened the medium-term target. 

Even more rarely you could have a tension between the two objectives where the inflation pressures could be persistent even with a weakening economy. Arguably such a scenario lies ahead for Britain if Brexit concerns continue to weigh on sterling and push up tradables prices even as the economy slows. 

Having it both ways

One policy arrow can only hit one target. So which should have priority in the event they did not overlap? And who should decide? 

On this question Robertson wants to have it both ways. 

He has told’s Alex Tarrant that he was not going to tell the Reserve Bank whether one objective is more important than the other. 

Talking to me, however, he said that ultimately the bank would remain independent. “But if unemployment starts to get out of control I would expect in that environment it says ‘At this time we are preferencing that and we are going to lower rates by a greater percentage than we might have’.” 

In the event of a stagflation scenario he would expect it to focus more on the falling output and employment side of the dilemma and to ease. 

“I think the setting of a clear direction here is what is important.” 

In short Robertson seems to be saying that if Parliament were to change the statute, the message to the bank would be when in doubt err on the side of stimulus. 

Heed the lessons from the past

In this respect the lessons of the 2000s are instructive, however. 

Alan Bollard’s mandate upon becoming governor was significantly loosened. It was time, the thinking went, to collect the Brash dividend of well-anchored inflation expectations and go for growth. 

So he eased. The unemployment rate headed down to 4%, below Nairu, while inflation wobbled around the 3% top of the target band. But as inflation pressures mounted, the bank, having got behind the curve, had to stand on the brake pedal, pushing the official cash rate to an eye-watering 8.25%, doing nasty things via the exchange rate to the tradables sector, and ankle-tapping the economy into recession before the global financial crisis hit. And the unemployment rate shot back up again. 

That was a policy mistake within the existing framework. Changing the framework in the ways Labour proposes would only increase the chances of repeating it. 

Robertson is non-committal at this stage on the composition of a monetary policy committee to take interest rate decisions, including to what extent it should include members from outside the bank. 

“None of these things is a silver bullet but part of creating an environment in which monetary policy is more integrated into overall economic policy.”  

The Treasury, back in 2012 when a change of governor was in the offing, saw merit in moving to a monetary policy committee, depending on the committee design. While no formal change was made, governor Graeme Wheeler has moved to a collegial process where OCR decisions are made by a committee comprising himself, the two deputy governors Grant Spencer and Geoff Bascand, and assistant governor John McDermott. 

What about the Greens & Winston?

The Greens say the Reserve Bank board should set the official cash rate, and that its minutes should be published within 14 days of each meeting. Greater transparency, they contend, would mean fewer surprises for markets, more stability for businesses and greater continuity for employment. 

New Zealand First leader Winston Peters is a longstanding critic of the monetary policy framework. He considers tweaking the PTA, as he did when Treasurer in the mid-1990s, is ineffectual and a change to the Reserve Bank Act is required “to create a sensible exchange rate regime” that serves New Zealand’s interests as an export-dependent economy. 

But the idea that the bank can dial up whatever exchange rate it wants by adjusting the OCR falls in the “If only...” zone. 

And it seems unlikely Peters would die in a ditch over this issue, compared with immigration or superannuation.

*Brian Fallow is a former long serving economics editor of The NZ Herald.

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I think the RBNZ controls are too linear. Inflation targeting did make sense at the time but unemployment targeting is also too simple. Given that as employment increases the number of people available for work also increases so you can have more workers but the same percentage unemployed. Using that statistic can be as flawed as the CPI.

The big risk is creating rules that are suited to the QE environment we are in now and then not responding when it changes.

The guiding principle of a Central Bank should be its neutrality and freedom from political influence, so that it can make tough decisions that politicians dont or wont make ( like the Crown for example ).

Because if you use the Central bank to meet political objectives , the outcomes will be too ghastly to contemplate.

It makes me wonder if Robertson is the right person for the Finance role with such ideas ?

He can't think of anything clever so I don't think he's the right person for the job.

Until house prices are included in the CPI, which represents the lions share of the average persons budget, the CPI is completely irrelevant today.

completely wrong. People don't buy a house every week or month !

What is included in CPI is the interest component of a mortgage payment, household maintenance, house operating costs (like electricity), and rent. These are the correct components for a consumers price index.

It is completely flawed thinking to suggest a consumer's household budget would include a regular puchase of a house. That is a capital item. The CPI measures the cost of on-going expenses.

In the same way, the CPI doesn't include the cost of buying a car. And more people would buy one of those more regularly than buying a house. Cars are capital items too.

You need to understand the difference between stocks and flows. Houses and cars are 'stocks', what consumers buy regularly (as measured by the CPI) is a 'flow'.

Stats NZ has its CPI reporting right. But it would be good to get it monthly ...

So rising interest rates to curb inflation, would in fact have the opposite effect by increasing everyones mortgage interest costs and pushing CPI up?

What about saving the $100,000 deposit from your weekly pay? Surely that's an "ongoing" cost which has increased hugely but still isn't reflected in the CPI?

I have to agree, it seems counter-intuitive to have interest in the CPI.

Although it does explain why the inflation rate is so low, yet generic household costs still seem to be rising. It effectively offsets everything and nullifies any changes.

I don't agree with this. The evidence is that most costs are not rising. We monitor grocery prices weekly and that shows little general change. ANZ monitors consumer prices independently and more broadly, and that shows little change. MED monitors petrol prices weekly, and that shows little change. We monitor wholesale power prices weekly, and that shows little change. MED monitors retail power prices, and that shows little change.

Where are all these "generic household cost" rises you claim? (Other than from costs imposed by agencies headed by people who got democtatically voted in.)

Most costs may not be rising, but the important ones are:
- Power (up again in April according to the last letter I received)
- Insurance
- Fuel (Still over $2 a litre despite oil costs being half what they were 2 years ago, and the currency slightly up)
- Rates (Granted democratically elected, but I am yet to see any combination of Councillors lower rates)
- GST on online services (still half the price of local stuff, but the price has gone up 15%)
- Daycare costs and school "donations" also seem to be on the creep.

I would also counter that grocery prices have gone up relative to product size, seasonality, and promotions.

A year ago a broccoli head was about 3-400g for $2, now they are only about 250-300g - same seems to be true of cauliflower, leeks, and other "price per item" produce.
Most consumables are coming in smaller containers for the same price.
I have also noticed 400g blocks of butter conveniently priced the same as a 500g block was 4 months ago (Given local dairy prices are now having their seasonal upturn)

A bad summer has seen tomatoes, capsicums, apples, avocados, and stone fruit all at considerably higher prices than the same period last year.

I have not seen any form of honey on "sale" at the local supermarket for well over 6 months. I fully understand the reasons why, but the price is still up
Meat "sales" also seem to be less generous than last year.

I could also include the ease of getting products online has got harder - several retailers I used to shop at, have for various "reasons" stopped shipping to NZ. Thus I now have to resort to local providers at significantly more cost to myself.

The last point I think should also somehow factor into CPI, as it is quite relevant. If the price is high here, people buy from overseas - particularly clothing, small consumer electronics, books, and specialist items.
If that avenue is closed, then technically the costs have increased.

The point is some costs are rising but because people have no more money they spend less elsewhere so the NET is what we see no inflation.

"seasonally" even if that is correct this is a cost you look through / ignore as its transitional.

For offshore items they are not purchased here and hence having them in the NZ CPI is silly, on top of that you would have to allow for exchange rate movements as well, for no real gain I can see.

"seem" hence why having baskets of produce they keep data on so the guessing gets taken away.

I use "seem" because they are my figures only. i.e. local supermarket, etc...

Figures may be different for the rest of NZ, but my base spending is going up at a significantly higher rate than the official CPI.

Maybe I should buy more low cost TVs?

You need to consider all the sectors inflation levels and no just the headline number in one part ie in some sectors there is no inflation or even deflation so putting up the OCR could seriously crash the economy.

Also many people dont have a mortgage so you dont increase their CPI.

No but the escalations in the costs of building materials should be included in the PPI

If only we had an annual unimproved land tax to capture housing inflation as a "flow". You can be sure the entitled ones would be squealing to high heaven then.

New housing is included in CPI, but…as with all second hand goods the sale price of existing houses is not included.

Housing and household utilities group / Home ownership
(% weighting CPI)
Year of adjustment / Purchase of new housing
1993 7.02%
1999 9.87%
2002 8.48%
2006 4.66%
2008 5.51%
2011 4.01%
2014 4.20%

Housing inflation makes up only 4.20% of the CPI basket, and as you can see it has had a falling effect on CPI over the last 20 years even though it has nearly quadrupled in price over that period.

From the above link:-
"From 1974 until 1993, prices of both previously occupied and new dwellings were tracked. From 1993, prices of only new dwellings were tracked (this aligned more closely with the weight allocated to home ownership, which represented the value of the net increase in the stock of owner-occupied housing during the weight reference period)."

"From 2006, a new method was adopted for estimating the weight for home ownership (which led to a lower weight). The method better reflected the falling rate of home ownership"

That's a bad feedback loop. Result:- Housing hyperinflation.

you are wrong IMHO.

a) For those having no mortgage (or small) and probably already having a mortgage the increase in a houses price has no bearing on their costs and hence CPI, (interest changes would sure). These people make up a substantial % of the population so even if we did such its hard to see what that would show/do. On top of that the crazy gains are regional so much of the country outside of the main centres has not seen large increases.

b) CPI is used as one tool to judge the health of the economy in a broad sense. So if say you added house prices to CPI and if that greatly increased that and hence RB put up the OCR the effect would be? The tradables sector already around 0% if not in deflation would be pushed further into it and could keel over and shed jobs like there is no tomorrow causing a recession, not something we want to see happen.

Labour signed us up with a Free trade agreement with China.
They compelled NZ manufacturers to comply with NZ regulations such as Health and safety, environmental compliance, employment law, etc..etc.. AND then expected them to compete against Chinese companies that did not have any compliance costs.

Result was that a number of NZ manufacturers closed down and went to China. They gave their intellectual property to chinese manufacturers , made all their staff redundant and then became importers.
Because their product was now cheaper other manufacturers had to follow suit.... ie close down and import

In my view, China is a Mercantilist economy.... they protect and subsidise their exporters. ( their Monetary system is a part of this )

Labours idea of giving the RBNZ a mandate to use monetary policy does not solve anything and will politicize Reserve Bank actions even more..

If you look at NZ credit growth..... very little of it goes into job creating productive investment.

Labour would be far better to focus of doing "fair trade" deals with other countries that result in NZ jobs being created rather than destroyed.

Go back to first principles... If jobs are important then take on the idea of "fair trade " deals.
If we think it is important to impose compliance type regulations because we value safety, health, workers rights , the environment...etc... then surely we have to impose those standards in any "fair trade" deal we do.
Otherwise it becomes some kind of hypocrisy..double standard.... that has the effect of destroying jobs in NZ..?? ( Countries without these compliance costs can produce cheaper ).

Simply making it easier to create more credit, that householders will likely borrow, is going to do squat for NZ job creation..????

The politicians know, but when they write their memoirs 20-30 years down the track they'll shake their heads and lament "How were we to know?" Better that than admit their role.

JK's will be out within 10, he will need something to fight against his legacy, do nothing john, especially now his so called team mates have started to turn on him and delete tweets

Globalization has been a disaster for most countries. Despite what you think of Trump, he is at least putting America and American workers first.

It is not a level playing ground when we have to close factories here because the minimum wage is high and the products are then made in China where workers get paid 50cents an hour and no regulated working conditions.
It may be good for consumers but it makes us very vulnerable and puts us at the behest of the Chinese.

A very dangerous situation when economies turn to custard.

Trump hasn't one sodding clue what he is doing, and the only reason he is where he is, is because he wants some sort of hero's immortality out of it, it is an ego trip only, if you think he gives more than one flying you-know-what about the average person, you are kidding yourself.

Do u think any of our past Prime Ministers knew what they were doing.??

I'd say most of them had more idea of which way was up than Trump, but that is not necessarily saying that much

I reckon that "fair trade" thing should be promoted, maybe it is an idea that could catch on, although I do think that is where tariffs can balance things out a bit when trading with countries who play a low ball game while we try to play a high ball game. Not quite sure where those tariffs should go, however, if we were honest, we would see they went to the people who are employed in unsafe, slave like conditions in those other countries.

Winstons idea: “to create a sensible exchange rate regime” that serves New Zealand’s interests as an export-dependent economy. "

I'd be interested to know what he means by that..?? Fixed exchange rate..?? Money printing to lower the exchange rate..???..etc

Export dependent? - We flog base commodities off at the lowest possible cost.

Anything of actual use, we import.

The only thing this would achieve is raising the cost of living while simultaneously lowering the wages.

China controls its currency value, so why not us?

Here's the answer you're looking for:

If we had say $30 billion US dollars in reserves we probably could have the same angst as the chinese, and manipulate our exchange rates
Im not optimistic.

Why is Robertson banging on about jobs , when the construction sector is desperately short of workers and bring Indonesian workers in to help , and why are we importing fruit pickers ?

The hospitality sector is also struggling to get staff , as are panelbeaters , transporters cant get drivers , etc etc?

95% employment rate is very good. Many of the remaining 5% will be unemployable or living in zombie towns.

Good news on Stuff this morning:

Apprenticeships now more popular than university

At last students are starting to listen and understand. Hopefully they are carefully considering their options and their motivations. It should help my facebook feed with less people posting about their degree being of little or no use.

It is good news hiding really bad news in the fact that we have systematically disincentivised tertiary education in this country.
Go to any department at Auckland university and sample the postgrad (Masters/PhD) research students - I would say only about 20% are New Zealand born and likely to stay here after graduation. In a few years time, NZ is going to have a very substantial intellectual disadvantage.

"In a few years time, NZ is going to have a very substantial intellectual disadvantage."

Seems likely, I wonder if part of the reason is incentive, there just aren't the opportunities for postgrads in the country.

*Edited typo

I'd say that in part, with an accompaniment of a complete lack of a viable lifestyle with National letting housing costs spiral out of control.

There are plenty of opportunities for post grads, it's just most don't get the post graduate degrees that are in demand. I selected a masters degree that is in demand. A shame that those who could get the degree now have to work to get the same degree rather than fully focus on their subjects and research.

"There are plenty of opportunities for post grads, it's just most don't get the post graduate degrees that are in demand"

The same could be said for all work, it turns out not everyone wants to be a chef, or a fruit picker.

A Post Grad degree used to guarantee you a better job, now it really only gives you leg up over a undergrad degree candidate, going for the same job.

Does the average kiwi really want to spend an extra few years and countless tens of thousands of dollars, only to pop out the other end with only a slightly better shot at a graduate level role.

All the post grads I know have gone overseas, although even that is no guarantee of work, our Uni's aren't exactly world renowned.

A generic post graduate degree is not a good option. More education and living costs plus more student loan. If people are going to do post graduate study they should get a specialist degree unless they are planning to be an academic.

With exception of those that I know doing post-doctorate work a lot of people are finding things aren't that great overseas, with exception of blue collar jobs in Australia.

"A generic post graduate degree is not a good option."

That's kind of the point. If you have to do a very specific post grad degree to get a good job, then surely that does mean opportunities are limited. Further, if everyone does only those specific degrees, the placements for them wont magically increase at the same rate.

Something does need to be done about tertiary institutions training too many people in areas with few or no jobs. I saw a good advertisement the other day with a cafe worker going and studying an "arts" degree. I don't see the point in working in a cafe, getting some unspecified BA or BFA only to end up working in a cafe again. All that does is add student loan debt and no productivity.

I'm torn. I think things like philosophy and art are things we need to foster, but on the other hand I'm not in favour of producing thousands of generic arts bachelors. We want to encourage and support the high achievers, but not encourage the taking of useless degrees.

Problem is too, many jobs simply use the presence of a degree as a "must have" when filtering CVs.

Other problem: our relentless focus on growing the universities as a business, rather than a focus on research and learning. Dilution of the organisations in favour of low educational value back-door visa offerings.

There's not an easy solution but restrictions should be put in place. Society still needs a number of arts graduates but not quite the flood that I see at graduation parades. Probably the same could be said for commerce degrees as well.

I agree, the generic commerce degree is becoming less and less relevant as more and more companies seem to require specialist branches.

As an aside we also seem to produce way to many lawyers. Back when I was studying we were producing 400+ lawyers a year for an estimated 250 positions.

Too many graduates and huge intakes at 100 level.

I left school after UE, I remember the seventh form common room catering for roughly 30 - 40 students back then (mid 80's), it wasnt the norm.

People started staying in high school longer after that. Recovery from the 1987 crash took too long and unemployment soared. There wasn't much reason to leave high school if there weren't any jobs. Student loans created a huge push on top of high unemployment to get a tertiary education. There still seems to be a hangover from that thinking.

lol, its the old joke

- An entrepreneur with no degree thinks of an idea
- The Engineering grad says - "yes I can build that
- The Marketing grad says - "yes I can sell that"
- The accountant grad says - "yes, I can make it profitable"
- The IT Grad says - "Yes I can make a system to make it more efficient"
- The HR and Management Grads say - "We can sort your staff"
- The Arts Grad gets the job and says - "Do you want fries with that?"

- The Law Grad becomes a barista instead of a barrister.

Haven't heard that one before - I like it.

What do you do if a Fine Arts graduate knocks on your door?

Pay them for your pizza.

This imbalance needs to change, maybe then we can stop importing people to fill the gaps.
nice to see a positive story about young kiwis, instead of calling them all druggies and layabouts
Williams says 53 per cent of the Vote Education budget goes to universities, and just 7 per cent goes to fund apprenticeships through the 11 industry training organisations (ITOs) which are members of the Federation

Welcome to the team Brian! Already looking like a very interesting election year,


Well, I think the Reserve Bank Act should be repealed in its entirety and the control of money back in Government hands. It was a fashion in the 1980s for all the Reserve Banks of the World to be come independent. Look at the mess they all have made. Personally I think it was a conspiracy on the part of the PTB. In a democracy, a country's RB should be controlled by its people not little mandarins who think they know it all.

My only question about Robertson is : Why is a Bachelor of Arts Political Science Graduate with little or no understanding of economics and finance the Labour party spokesperson for finance ?

Do they not have someone from a commercial- legal or commercial background who understands how Finance actually works in the Labour party ?

Its a recipe for disaster if he is the pick for the Finance portfolio

Probably the closest to an economist that they have.

I wonder truthfully how much of a difference it makes. Key was a forex trader who oversaw - and ignored - the development of the worst housing crisis NZ has ever seen whilst also kicking the pension can down the road for someone else to pick up. Michael Cullen was a PhD in social and economic history who was paying down debt. Bill English has a bachelor of commerce (so a few basic economics and accounting papers) followed by a masters in English lit.

Robertson's guess - advised by various wonks - may be just as good as Key and English's guess, especially given the evidence of Key and English spending the last three terms denying the very existence of any housing good can their grasp of economics be, in that light?

When have we ever had a finance minister who knew what he was doing? So does it matter.

What did Bill English achieve as finance minister?

The flaw in all of this (whether the existing regime or proposals like Labour's) is that they assume there is a tight connection between whatever levers they pull/dials they tweak, and actual economic measured outcomes.

This is particularly true of jobs, which can be created at will by Gubmint in various make-work schemes but which have Jack Squat productivity. The job market is like a hospital or a university: the outcomes depend exquisitely on the exact personal qualities that present at the door. No amount of central tweaking is gonna change those qualities except after a longish lag, and that lag is influenced by so many other factors not amenable to CG tweaking as to be effectively beyond control.

So Labour's noble efforts to move the dial can fairly simply be dismissed as lip gloss applied to swine.....

The only BIG issue this election is housing , and if Labour or anyone else produces a policy document that is workable , practical and affordable , then I will vote for them .

Right now , no one has a solution .

Labour has a wishy-washy wish - list , that is neither practical , workable nor affordable , and its out of date having been drawn up under David Shearer's leadership

National did not cause the housing problem , the whole thing was pretty much out of their hands , they did not fix interest rates , they did not stop foreign buyers who were buying houses within our laws , or slow migration , and they did not crack the whip to get Auckland Council to do what Auckland Council should have done themselves .

National did make changes to the Building Code and encouraged Councils to be exceptionally difficult with Consent processing in 2012 with things starting to get worse in 2013. That is entirely National's fault and no fixes have turned up yet.


So governments are not responsible for their inaction now?

What about deliberately obfuscating the issue then, like the foreign buyers survey? That was not simply incompetence, it was carefully designed to confuse everyone and has purposely not been fixed to date.

Yes, arguably National's actions were cynical and deliberate rather than simply "We've tried nothing and we're all out of ideas!"

"National did not cause the housing problem , the whole thing was pretty much out of their hands , they did not fix interest rates , they did not stop foreign buyers who were buying houses within our laws , or slow migration , and they did not crack the whip to get Auckland Council to do what Auckland Council should have done themselves" Huh?

Precisely .. huh?

Well Interest rates are set by the RBNZ and foreign depositors
Foreigners have ben entitled to buy houses here since the year dot
The migration policy has ben in place for a generation ( at least)
And Auckland council is an autonomous body , run by a bunch of left-wingers , and not subject to control from Wellingtion .
The property market is the only truly free market in New Zealand

So National is not to blame for the housing mess

Nonsense. The property market isn't free at all.

In a functioning free market, prices would be a a function of demand. And supply would increase to meet the deficit, due to the increased margins. That hasn't happened and doesn't appear to be significantly improving.

Lets ask our selfs are labour's policies any more wishy washy than National implementation of their own plans over the past 9 year.

National's lack of action has been transparent at best, cynical at worst. and even if they had executed their plan to anywhere near an acceptable level it wouldn't be enough.

Out of their hands!???... come on what are we paying these people for.