Finance Minister Grant Robertson has denied his Government’s spending is responsible for soaring inflation.
The minister told Q+A that the economy is currently seeing high demand for goods and services, which is pushing prices up, and that it was being driven by global economic forces.
“Every country in the world is facing them. Of course the Government needs to be careful about how we spend our money – we always are. But we’re not going to lower the price of petrol by cutting health spending,” Robertson said.
The Government’s increase in spending, along with the quality of that spending, has been a point raised by the opposition in recent weeks.
In a statement, National’s finance spokesperson Simon Bridges said New Zealanders were being left out of pocket, with inflation rising faster than wage growth.
“Grant Robertson’s glib response on inflation in the past has been that ‘it’s international’," Bridges said.
If that’s a complete answer, then he needs to explain why the domestic part of New Zealand’s inflation is also rising and why Australia’s is considerably lower than ours at 3.5% over the same period.”
A recent OECD report said “policy stimulus” was contributing to an overheated economy in New Zealand.
In response, Robertson said the additional spending has been on programmes like the wage subsidy and resurgence payments.
“I would challenge any other politician to say whether they would not have done those things, because they were important for keeping people in work.”
He said much of that “across the board” fiscal stimulus had now been withdrawn.
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