Acting Prime Minister Grant Robertson has announced a further three projects have been approved under the Government’s fast-tracking of the Resource Management Act.
They include a wind farm upgrade, a housing development in Auckland which will create 58 new housing units, and a 315-housing unit development in Lake Hayes in Otago.
That brings to 50 the number of projects that have been consented about 15 months more quickly than usual under the provisions to fast-track some projects.
Robertson said re-opening to the world is critical for the economic rebuild, so Prime Minister Jacinda Ardern’s trip to Singapore and Japan is critical, as is the re-opening of the borders.
“Growing our economy and creating more jobs while controlling debt are key components to rebuild the economy.”
Robertson is taking the reins in today’s post-Cabinet press conference, stepping up as Ardern is away.
Robertson also chaired the Government’s weekly Cabinet meeting today, a job usually done by Ardern who is on a week-long trade mission to Singapore and Japan.
Surging living costs driven by Covid supply disruptions and Ukraine war – Robertson
While New Zealanders have reason to be concerned about the cost of living, Robertson said he does not believe Kiwis blame the Government for inflation.
Robertson said the big drivers of cost of living pressures were off=shore, including Covid-19 supply distruptions and the Ukraine war, rather than Government spending.
While the Government had to keep an eye on its spending and ensure it was value for money, cuts to services would be detrimental, he said.
He said the health reforms would include a one-off cost, but the operational budget was critical.
“Government spending on the health system is important. If we cut that, it will not have an effect on the cost of food or petrol.”
He said the moves to cut fuel excise for three months and road user charges would have an impact on inflation and he expected the CPI statistics later this week to reflect that.
New data out this week that is expected to show annual inflation heading to 7 per cent or higher.
The Government would set new fiscal rules for itself, after abandoning the earlier set due to Covid-19. Those rules in the past have covered issues such as debt reduction targets.
“We will continue to keep a lid on debt, We were well served by having relatively low debt when we came in [to Covid-19} but I also have to address an infrastructure deficit.”
He said the wide-spread support during Covid-19 was no longer draining the books and instead more targeted cost of living cost was underway.
He said there were areas of investment which had be to be carried on with, such as state housing, “but every decision we make at the Budget is based on whether we get value for money” and whether it was needed.
He said the Government acknowledged there was a housing crisis, and the Reserve Bank’s job was to keep an eye on inflation but the Government had to meet the needs of New Zealanders.
Robertson said it would take some time for measures to increase competitiveness in the supermarket industry to take effect – possibly a year or more.
In the interim, the Government was trying to ease pressure on low to middle income families in the meantime. While inflation was predicted to keep rising into the second quarter of the year, it was forecast to drop back past that, he said.
He would not hint whether the Budget would include further relief for those struggling with inflation, but said the Government was always looking for ways to make life easier for people.
On cruise ships returning to New Zealand, Robertson said a decision was likely in the next couple of weeks.
He said there appeared to be no intention for cruise ships to return until at least October and a decision would be made before then.
He said the Government was awaiting further advice from the Ministry of Health before making a decision to allow them in – given difficulties on cruise ships at the start of the pandemic.
Robertson said he was keen to see them return as a valuable source of tourism.
On the ability for people to pay their mortgages as interest rates rose, Robertson said there was no doubt some would experience mortgage stress.
“How that plays out depends on individual cricumstances.”
For some that would mean cutting their discretionary spending – at the worst end, some could be forced to sell their houses.
He said it was part of the cycle, and the Government had tilted the market toward first-home buyers more, but people had to be able to pay their mortgages.
The Government’s role in feeding these inflationary pressures is a hotly contested political issue, with National arguing the Government’s massive economic stimulus has overcooked the economy.
Robertson has argued that the chief cause of inflation has been supply chain disruption and inflationary pressure coming from overseas, including the fallout from the war in Ukraine.
Reserve Bank Governor Adrian Orr, whose job is to keep inflation stable, weighed into the debate in a speech with the IMF, published this morning.
Orr said that central banks would not be able to achieve their mandates around inflation and maximum sustainable employment on their own.
“We are going to need support,” he said.
That would require clear communication with “fiscal authorities” and “how they could assist around more targeted effective fiscal policies”.
Those remarks promoted National finance spokeswoman Nicola Willis to call for more fiscal restraint from the Government.
“The Finance Minister must heed this warning,” she said.
Robertson should take the comments seriously and “rein in extravagant spending plans”, Willis said.
Robertson told RNZ this morning the inflation rate would likely rise before falling.
He acknowledged it was likely to get higher before falling, as this had been the forecast of many global commentators.
“I expect that it will be rising as it is right around the world,” Robertson said.
“The amount that it rises by is obviously what everyone is debating.”
In the US and UK the inflation rate has now topped 8 per cent.
Ardern is currently in Singapore. Today she announced an expansion to New Zealand’s working holiday visa scheme with Singapore.
She will later travel to Japan where she will make further trade-related announcements.
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