No Minister


with 24 comments

I guess many eyes will be on the Reserve Bank when it announces the new OCR on Wednesday. It is projected to rise anything between 50 and 100 basis points. We’ll be generous … lets assume it comes in at the midway figure. That means that every Kiwi family with the average mortgage debt assessed at $260,000 (Stats NZ as at Jun 2021) could/will end up paying an additional $1.950 per annum in interest repayments.

Brings into sharp contrast the $350 ‘cost of living’ payment for those earning <$75,000 announced in the budget … and we won’t even talk about increases to the price of petrol or basic food items let alone the rest.

Roberston’s band-aid solution to inflation out of control is revealed for what it is … the King Canute approach to taming inflation. $6b dollars of new spending in the budget and all of that predicated on borrow and hope … Labour has redefined economic orthodoxy (and unorthodoxy) to new levels believing that you can spend your way out of inflation without any impact.

Economic neanderthals all.


Written by The Veteran

May 23, 2022 at 10:19 pm

Posted in New Zealand, NZ Labour Party

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24 Responses

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  1. I share you assessment of your current administration. Australia has just elected the Village Idiot and the Seven Dwarves and already respected media are talking about the Albanese, Trudeau and Ardern triumvirate of cluelessness.

    However, I must point out the only people adversely affected by a rising OCR are those with variable rates. Last time I looked (not recently) They were a small proportion.


    May 23, 2022 at 10:45 pm

    • Adolf … the vast majority on mortgages in NZL are fixed term. Having said that that Reserve Bank has it that 80% of those mortgages are due to be re-fixed in less than the next two years (statement as of 25 Mar 22).

      The Veteran

      May 23, 2022 at 10:56 pm

    • Actually my home mortgage floating rate doesn’t get that screwed by this sort of thing, as I’ve learned through three recessions now in the last twenty years. In other words I might pay marginally more than fixed in good times, but it doesn’t seem to get whacked that hard in bad times. Perhaps this time will be different.

      Similarly with other debt: the short-term stuff is still not showing huge change, whereas the fixed stuff is already going apeshit. A month ago I checked the three year fixed interest loan I’ll have to roll over to in 2023 and found that it’s at 8%.

      I’m currently paying less than 4%.

      My debts will be much reduced by then but they won’t be zero so …. brace for impact.

      Tom Hunter

      May 23, 2022 at 11:01 pm

      • Tom we stuck with floating or capped through the term of all of our mortgages and don’t regret doing so.


        May 24, 2022 at 8:54 am

      • Just rolled off a 2.1% fixed term. Had enough cash available (set aside for a project) to offset the mortgage so now just sitting on an offset until the dust settles. There have been amazing fixed rates for years now. No wonder the property market has been out of control.

        John JohnO

        May 24, 2022 at 9:29 am

    • Adolf – you could add Biden to the above triumvirate.


      May 24, 2022 at 8:51 am

      • I actually did but it was a typo.


        May 24, 2022 at 12:58 pm

  2. 50 and 100 basic points increase means that Orr and company are finally hitting the panic button. Too late my love, too late. They needed to hit the brakes a year ago and they must be praying to the Great Tree God that foreign improvements will save them from having to exceed the inflation rate with the interest rate to try and push down the former, as Volker had too with the Central Reserve forty years ago.

    But whether it’s oil, gas, coal or food, I see no relief in sight from those foreign pressures.


    Tom Hunter

    May 23, 2022 at 11:30 pm

  3. Vet I have said many times on various blogs and forums that both Robertson and Orr have been promoted well above their capabilities and I expect double digit inflation by election time.

    The problem is exacerbated by Ardern being an economic neanderthal (dumbarse) so she believes everything Robertson tells her and as a result the country suffers from he and Orrs incompetence.


    May 24, 2022 at 8:59 am

  4. It’s a “basis point” i.e. 0.01% and the $350 cost of living payment applies to anyone earning $70K or less who doesn’t get the winter energy payment.


    May 24, 2022 at 1:20 pm

  5. Unfortunately the Student Union didnt offer classes in standard economics, and even if it did only Marxist economic policy, which was not strong on Monetary policy.

    If the Student Union ran short of money they just taxed the students more, who were compulsory members.

    And Freidman’s quote can be a bit obscure for the under-educated

    “Inflation is always and everywhere a monetary phenomenon.”

    That paradigm has not changed in 5000 years of economic development.

    Translated into simpler words:

    Inflation is directly caused by having too much money in circulation.

    Looks like that lesson has to be relearned every 2-3 generations…and Adrian Orr is supposed to be a wizz kid.


    May 24, 2022 at 2:06 pm

  6. And heres a couple great example, thanks to the Taxpayers Union:

    “The Budget has allocated $10 million to events commemorating the Treaty of Waitangi and the new Matariki public holiday.

    From Budget 2022: the Government is spending $27 million of your money on mātauranga Māori (traditional knowledge).
    In practice, this means big bucks for iwi-linked consultants.

    and I love this one:

    “This is from last week’s Budget. The Prime Minister’s department plans to spend $5,076,000 on “COVID-19 Service Recognition” awards (lapel pins).”

    I guess there may be some people from this blog in line for a lapel bin for singing off the Govt’s Covid song sheet….my name wont be there for sure, for sure, good buddy!

    I just hope the National Party has opened negotiations with Don Brash or Graham Wheeler for a 2 year short term contract as the new Governor of the Reserve Bank. (Please God, not not John Key as he would sit on his arse and do nothing)


    May 24, 2022 at 2:33 pm

  7. Rossco … are you serious about DB even after his advice that were he able he would be voting for Peters in the Tauranga by election should he decide to stand (which he didn’t). Another misstep in a long line of missteps. Orr needs to go as he has failed to contain inflation to within the 1-3% band agreed between the Bank and the Government but equally so does Robertson because he lent on Orr to indulge in quantitative easing and then some and Orr’s only response was to say ‘how high ‘ when Robertson said ‘jump’.

    Tomorrow the cost of the government’s uncontrolled spending in times of high inflation will again be revealed with hundreds of thousands of ordinary Kiwis picking up the tab.

    You have JKDS. Key turned the projected decade of deficits into a surplus. Inflation was tad over 5% when he took office and less than 1% we he left office in 2016. I guess you think that just happened in spite of rather than because of … sad.

    The Veteran

    May 24, 2022 at 3:44 pm

    • That’s kind of Rossco’s point though isn’t it?

      JK had a huge opportunity with the GFC and the earthquakes to make some desperately needed structural changes to put us back on an upwards trajectory. Instead we got Labour lite, all Labour’s policy settings, just managed better “tm”


      May 24, 2022 at 4:17 pm

    • Vet I maybe wrong but DB is acclaimed as the best Governor of the RB ..eva.???

      You may know a better one but didnt suggest it

      I dont question DB’s voting intentions , after all you voted for some real estate magnates party

      See Paranormal for the rest of the answer 🙂


      May 24, 2022 at 4:26 pm

      • I don’t doubt that DB performed well as Governor of the Reserve Bank … but that was two decades ago and since then his career pathway has been characterised by missteps. Yesterday’s man.

        For Paranormal .. you may like to enumerate the structural changes you talk of remembering always that Key governed in a MMP environment and with the support of ACT, the United Party and the Maori Party all of whom held an effective veto over major policy decisions. But all this is tangential to the thrust of my post which highlighted that Labour has let the inflation genie out of the bottle and action by the Reserve Bank in trying get him back in is going to impact negatively on many kiwi households. It is a matter of record that the John Key government managed NZL back into surplus and has inflation bruised, battered and on the ropes. You seem incapable of giving credit where credits due.

        The Veteran

        May 24, 2022 at 4:54 pm

      • Yep he did a good job as far as it went, I acknowledge that.

        That was all technical stuff that any reasonable PM could handle. Most of it by the deputy PM and Finance guy whose name escapes me.

        Key lacked a vision so he couldn’t sell anything hence the excuse of MMP.

        Still waiting for your Don Brash replacement, surely you’re not using ageism as an excuse. Sure Don’s made some mis steps, I personally dont know anyone who hasnt..but he knew how to run the RB.

        Step 1 : Kill the Money supply
        Step 2: recruit economics graduates
        Step 3 : kill the woke employees off, fast
        Ste4 4: get the OCR up
        Step 5: Run a PR campaign and explain whats happening.
        Step 6 : Work with the new Govt with a $5-$10 Billion expenditure cut in Year 1

        If I can do it so can Don


        May 24, 2022 at 5:10 pm

    • Key turned the projected decade of deficits into a surplus. Inflation was tad over 5% when he took office and less than 1% we he left office in 2016. I guess you think that just happened in spite of rather than because of.

      But that’s just the point, Vet, one that I’m sure Rossco and Paranormal will get but which you don’t seem to. I’m more than happy to credit Key and his team for those accomplishments – but we’re right back to what they inherited in 2008 and your implication is that the only answer is having National permanently in power, which is never going to happen.

      Having such a cycle might not be so bad if the general trajectory was upwards, but it seems to me that we’re in status quo territory at best and more likely going steadily backwards (certainly according to your leader’s speech the other day).

      Or as this fellow once put it about “electing the right people”:

      I have often said we shall not correct the state of affairs by electing the right people; we’ve tried that. The right people before they’re elected become the wrong people after they’re elected. The important thing is to make it politically profitable for the wrong people to do the right thing. If it is not politically profitable for the wrong people to do the right thing, the right people will not do the right thing either.

      Which I think I’ll add to my latest post on just one aspect of this shitty cycle.

      Tom Hunter

      May 24, 2022 at 5:06 pm

  8. rossco

    May 24, 2022 at 4:46 pm

  9. Rossco …. MMP is what it is …. it’s the reason why Key was unable to push through meaningful reform of the RMA (among other things) … neither the United Party nor the Maori Party would buy into it. Not an excuse …. simple political reality. Labour has no such constraints. We effectively have a government enjoying unbridled power which MMP was expected to prevent. That’s the reality we face today. I would hope the the incoming National/ACT government won’t by constrained to the extent to which the National/ACT/United/MP government was.

    Not up to me to nominate who should replace Orr but whatever, meeting the target inflation band is an important ingredient to us achieving long term prosperity because nothing, but nothing destroys the economy like inflation out of control. But I disagree with your Step 6. Its not the role of the Treasury to cut government expenditure. That’s the role of government … start and finish. The Treasury is not the government.

    The Veteran

    May 24, 2022 at 6:07 pm

    • Agree Vet, The Treasury is not the Govt but they will put a paper up to the incoming Govt detailing what we needs to be done, now, in a month, in 3 months.

      It’ll obviously be a long list.

      Whether your man has the majority plus the balls to do it remains the big question .

      He’ll have the election campaign to sell it, the vision with the short to medium term pain!


      May 24, 2022 at 7:02 pm

      • From what I have read Robertson mostly ignores Treasury advice anyway.

        I think it is also apparent that he has the `whip hand’ with Orr.


        May 24, 2022 at 10:09 pm

  10. pdm 10.09 … you’ve got it … only Roberstson could tell Orr to ignore the 1-3% inflation mandate.

    The Veteran

    May 24, 2022 at 11:02 pm

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