New ways to tackle inflation without a heavy cost on workers are needed, says Council of Trade Unions
The root cause of our inflation and cost of living challenge is the lack of a long-term economic plan says the New Zealand Council of Trade Unions.
NZCTU Economist Craig Renney said the issues New Zealand is facing could be addressed with an Inflation and Incomes Act – as set out in its latest report. “Inflation is viewed as a short-term crisis, when in reality, it’s a long-term problem associated with New Zealand’s present economic model.
“Right now the main tool for controlling inflation is increasing the interest rate - that takes money out of working people's pockets disproportionately and increases unemployment - mostly for low income Kiwis. That makes New Zealand's already dire wealth gap worse, and hobbles our long-term economic growth.
“Every New Zealander is grappling with inflation and the cost of living. We need to be having a new conversation about how we address these issues not just now, but in the long run. We need a new approach that builds greater resilience to inflation and develops a more equitable economy in the process.
“An Inflation and Incomes Act would create a framework for how New Zealand manages its transition to a longer-term low-inflation environment. It would better marshal our economic development, infrastructure, and public service needs so that we can respond to inevitable economic change.
“The Act would pave the way for the kinds of investments that we need to tackle inflation in the long-run. Investments in home insulation, electrifying the vehicle fleet, and building the homes we need. Making sure that supply-chains are resilient, and that there is genuine competition in markets. And doing so in a way that manages the cost so that it is simply borne equitably by New Zealanders.
“Inflation is not a new problem for the poorest in New Zealand. It will continue to be an issue for all Kiwis unless we change how we approach it. We need to look towards alternative measures of curbing inflation that doesn’t just call for higher unemployment.”
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