Twyford ignores Labour’s own history with interest rates

Phil Twyford is trying to blame interest rates for the so-called housing crisis.

The average Kiwi household is $250 a year worse off because the Auckland housing boom has kept interest rates high, Labour has claimed.

With the Reserve Bank due to revise its 3.5 per cent official cash rate (OCR) on Thursday, Labour housing spokesman Phil Twyford has issued figures showing an across the board 0.5 cut would provide an immediate $725 million boost.

He says the analysis ? which he admits is an assumption, given all interest rates would not immediately respond in a uniform way ? reinforces his criticism of National?s ?abject failure? to control soaring prices or build enough affordable housing.

?This is money that is currently going to offshore lenders. The whole country ? households, consumers and businesses ? are paying the price of the Government?s failure to fix the Auckland housing crisis,? Twyford said.

Which kind of ignores Labour’s recent history on interest rates.

David Farrar takes a break from arts reviews to point out the hypocrisy of Twyford’s statements.

Let?s have a look at the history of the OCR:

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Yeah that 3.5% is just killing businesses and households. Labour never had it below 4.5% and even had it above 8% until they crashed the economy into recession (before the GFC struck).

But Labour’s track record on interest rates is worse than that. In the 1980s I well remember interest rates well over 20% until 1990 when jim Bolger cleaned out Labour in a landslide. The OCR was only introduced in 1999, so we have to rely on historic interest rate charts for a good look.

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So Interests rates drop under National governments and are high or increase under Labour governments.

I’m not so sure Phil Twyford wanted to pick that particular scab.

 

– Kiwiblog, Fairfax

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