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Luxon: ‘Dumb’ spending behind inflation

Henry Cooke henry.cooke@stuff.co.nz READ MORE BUSINESS

National Party leader Christopher Luxon says the Government needs to stop spending money on ‘‘dumb stuff’’ in order to arrest rising inflation rates.

Cost inflation hit 5.9 per cent in the year to December 2021, Stats NZ said yesterday – a high not reached since 1990.

High construction costs, rents and transport costs drove much of the inflation, with the cost of food actually dropping in the final quarter. The average across OECD nations for the same period was 5.8 per cent.

Prime Minister Jacinda Ardern said global conditions were causing much of the inflation – noting that many other developed countries were seeing cost rises, some even higher.

She suggested that Luxon’s push to cut spending would see the massively expensive wage subsidy cut, a claim Luxon rejected later.

The Green Party and Opportunities Party both pointed to the Reserve Bank, saying the loose monetary policy used to combat a potential recession from

Covid-19 had overshot the mark.

Luxon said the Government had a chance to reconsider the $6 billion in new spending it had forecast for the 2022 Budget. He said there was a ‘‘lot of wasteful spending’’ and ‘‘dumb stuff that needs to be stopped.’’

Asked for examples of wasteful spending to cut, Luxon pointed to cameras on fishing boats and consultants’ fees for the Three Waters reform coming out of the Covid-19 budget, and the $51 million spent on the cancelled Auckland Harbour cycle bridge.

Cameras on fishing boats are estimated to cost $68m, while the policy costs from the Three Waters programme sit at around $20m. All up, these costs make up about 0.1 per cent of the annual Government budget.

Asked if he would cut the wage subsidy – which cost $15b, or around 13 per cent of the annual budget – Luxon said it was good spending that National supported.

Finance Minister Grant Robertson rejected the claim that high government spending was to blame. ‘‘Supply chain disruptions and rising international shipping costs are leading to higher building costs, oil prices and other imported goods prices.’’

National News

en-nz

2022-01-28T08:00:00.0000000Z

2022-01-28T08:00:00.0000000Z

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