Responding to the Minister of Finance’s announcement today of an independent review into COVID-19 monetary policy, Taxpayers’ Union spokesperson James Ross said the review is “long overdue”.

“The Reserve Bank pumped far too much money into the economy. The result was a surge in asset prices and the kind of inflation that has hammered households ever since.”

“When the Bank finally realised it had let the inflation genie out of the bottle, it responded with sharp rises in the Official Cash Rate. That response tipped the economy into recession: a recession the former Governor, Adrian Orr, quite publicly said was necessary.”

“But the downturn has been deeper and longer than even he appears to have anticipated.”

“A searching investigation into how the Reserve Bank assessed the situation, and how it reached its decisions, is desperately needed. The review must examine the apparent lack of coordination between monetary and fiscal policy, and recommend corrective action.”

“It also needs to scrutinise the Bank’s use of ‘alternative’ tools, including the scale, timing, and duration of those interventions.”

“The Bank brutalised the New Zealand economy to correct its own mistakes. New Zealanders are still living with the consequences of the worst Bank-induced recession in more than thirty years.”

“This cannot be a once-over-lightly desktop exercise. It must be a forensic examination that produces a practical blueprint to prevent a repeat of this economic disaster. The public deserve nothing less.”

“The review should also have the full legal powers of a government inquiry. Decision makers should be required to give evidence under oath and in public. These decisions had major, real-world impacts on New Zealanders’ lives, and transparency demands it.”

Responding to today’s reporting that Minister Willis expects the current rise in inflation to be "a blip", Taxpayers’ Union spokesperson Tory Relf said:

“Minister Willis is sounding a lot like former US Treasury Secretary Janet Yellen, who dismissed rising inflation under the Biden administration and got it completely wrong. Minister Willis’ claim that the increase is mainly due to international factors downplays the domestic pressures her Government can actually influence.”

“As Kiwibank recently noted, it is the heat in domestic inflation that is most disappointing. High electricity prices driven by a cosy power sector oligopoly, and grossly excessive local government rate rises are major contributors. The Government knows this, but its responses have been ineffective or delayed.”

“The Government’s excessive spending is also adding fuel to the fire. Continuous borrowing is building a mounting debt pile, with Total Crown borrowing now nearly $2 billion a month. Financial markets are already signalling expectations that the Reserve Bank may need to bring forward interest rate hikes later this year. Mortgage rates have already started rising on that basis, and economist Brad Olsen has speculated the Reserve Bank could even lift rates as soon as May.”

“Budget 2026 is Minister Willis’ last real chance to show spending restraint. Continued failure to rein in government spending will cement a record of fiscal ill-discipline. Claims of a surplus at the end of every forecast period will keep losing credibility, and international credit ratings agencies will take notice.”

The Taxpayers’ Union is calling on Minister Willis to deliver full capital expensing to boost the economy following today’s figures showing unemployment at an eight-year high, with youth unemployment at 15%.

Taxpayers’ Union spokesperson Tory Relf said:

“More New Zealanders out of work is not a sign of a healthy economy, especially when combined with last month's GDP contraction. Minister Willis cannot simply talk about growth. If she wants more jobs and higher wages, she needs to back New Zealanders who create them.”

“Cutting wasteful spending and reducing taxes would send a clear signal that New Zealand is open for business again. You don’t solve unemployment by growing bureaucracy, you solve it by letting workers and employers keep more of what they earn so they can invest, hire, and build.”
 

“If Minister Willis is looking for inspiration, she needs to look no further than our report Going for Growth: Full Expensing of Capital Expenditure. Full capital‑expensing of new equipment and technology would unleash investment, lift productivity and create real jobs, and it’s right there in her hands.”