New inflation controls needed

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Forums › Politics › New inflation controls needed

Eitsop

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#302473 26-Nov-2022 10:15

All inflation is bad, which is why we have independent RBNZ. But sadly, they don't control all inflation, ie house prices/land prices
Also the tool the RBNZ has is too blunt, which everyone knows..

House/land inflation is having undesired effects, which I think we see impacts across society, higher food & goods prices due to rent costs of retailers, increased crime, depression, and suicide. it is very hard for young people to start out

@insane suggested in another thread to have an mandatory additional contribution Kiwisaver to reduce cash flow in economy and force savings.

insane: a mandatory additional contribution to KiwiSaver.
It will also suck money out of the economy, and importantly:
- Not go into interest payments
- Not go to Aussie banks
- Still be available for true hardship
- Available to be extracted at retirement

Also the Additional contribution would not impact pensioners/retirees/beneficiaries.

RBNZ still needs to keep the cash rate tool.. but for the purpose of maintaining house price inflation.
So Government needs to set house price inflation targets for the RBNZ

GV27

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#3002333 28-Nov-2022 06:29

Hard disagree. Kiwisaver as a voluntary affair is fine. But 'sucking money out of the economy' actually means taking it from people's take-home pay. If you're on $150K p.a. - fine, you just have less to spend. If you're on much less to that, living paycheque to paycheque or you now have a mortgage costing you an arm and a leg more than it used to, it's a seriously poor use of funds. Far better to auto-enroll people and have them opt out like we do now.

And frankly, there's nothing about how RBNZ has conducted themselves that gives me confidence they should be given the ability to effectively directly tax people to the benefit of Kiwisaver funds. Let's not forget this 'period of inflation running hot' is off the back of years of inflation being within the target window but house prices absolutely exploding.

There's plenty of other things the government can do to address house prices, but it would involve burning some political capital that they haven't set aside for huge expensive centralisation exercises, or media mergers, or stripping assets from local councils.

If you genuinely want young people to get the best start possible, spend money making sure they show up to school and that they can read and write before they leave. After that, the next stop on the list should be reforming the student loan repayment scheme to be more in line with Australia's.

Eitsop

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#3003300 29-Nov-2022 19:14

GV27:Hard disagree. Kiwisaver as a voluntary affair is fine. But 'sucking money out of the economy' actually means taking it from people's take-home pay. If you're on $150K p.a. - fine, you just have less to spend. If you're on much less to that, living paycheque to paycheque or you now have a mortgage costing you an arm and a leg more than it used to, it's a seriously poor use of funds.

We are in a right mess with inflation and house prices, and and this control wouldn't be suited right at this point.. but could be a suitable tool to give to RBNZ.

At this point house prices need to crash. and we need to get inflation back in target range.

Then the RBNZ should be given a mandate to ensure house prices don't rise more than 5% on regional basis. Setting cash rate by region.

Then kiwisaver could be used to maintain food/services inflation

Eitsop

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#3012805 21-Dec-2022 16:56

Seems it’s not that crazy. It has been discussed before
https://i.stuff.co.nz/business/130658598/could-raising-kiwisaver-contributions-be-a-better-way-of-subduing-inflation